Decision behavior in supply chains with random production yields / Josephine Clemens
VerfasserClemens, Josephine
ErschienenMagdeburg : Otto von Guericke University Magdeburg, Faculty of Economics and Management, October 2017
Umfang1 Online-Ressource (39 Seiten, 1,36 MB) : Illustrationen, Diagramme
SerieWorking paper series ; no. 2017, 17
 Das Dokument ist frei verfügbar
Decision behavior in supply chains with random production yields [1.36 mb]
Dealing with supply risks is one of the challenges of decision makers in supply chains as producing and sourcing become more and more complex. Theoretical research on different types of supply uncertainty as well as their management is well covered. Behavioral aspects in this context however have not received much attention so far. In this paper we present an experimental study which aims at investigating how subjects make decisions of ordering and producing in the presence of random production yields at a supplier i.e. production output is a random fraction of production input. Subjects were confronted with the situation of either the buyer or the supplier in a simple two-tier supply chain with deterministic demand and had to make the respective quantity decisions. Results show that buyers have a good understanding of the situation and are likely to follow a probabilistic choice rule. In addition to that hedging against supply risks drives their behavior of over-ordering. Suppliers on the other hand start off with moderate production decisions but improve over time which indicates learning effects. Furthermore the study shows that additional sharing of information on yield rates is no cure for inefficient behavior of the buyer.