Simulation Research on Impact of Consumer Bounded Rationality on Optimal Pricing Strategy in Supply Chain

Journal of System Simulation ›› 2015, Vol. 27 ›› Issue (12): 2898-2907.

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Simulation Research on Impact of Consumer Bounded Rationality on Optimal Pricing Strategy in Supply Chain

Li Feng¹, Wei Ying²

1. School of Business Administration, South China University of Technology, Guangzhou 510640, China;
2. Department of Business Administration, Jinan University, Guangzhou 510632, China

Received:2014-06-12 Revised:2014-09-24 Online:2015-12-08 Published:2020-07-30

Abstract

Abstract: Noticing increasing market responses to online sales channel, the impact of bounded rationality of consumer on pricing strategy was studied in a dual-channel supply chain system, which consists of one manufacturer and one retailer. A multiple-agent based modeling and simulation approach was proposed and employed. In a Stackelberg game setting with the manufacturer the leader, optimal pricing decisions were calculated from the simulation model. Impacts of consumer behavior parameters on channel prices and sales revenue were analyzed, i.e., degree of consumer bounded rationality, consumer’s acceptance of online channel, as well as consumer’s valuation distribution to the product. Results reveal that the manufacturer benefits from higher acceptance level of online channel, and the retailer will be better off for increasing degree of consumer’s bounded rationality.

Key words: bounded rationality, loss aversion, dual-channel supply chain, pricing strategy, multi-agent simulation

CLC Number:

TP391.9

Li Feng, Wei Ying. Simulation Research on Impact of Consumer Bounded Rationality on Optimal Pricing Strategy in Supply Chain[J]. Journal of System Simulation, 2015, 27(12): 2898-2907.

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Simulation Research on Impact of Consumer Bounded Rationality on Optimal Pricing Strategy in Supply Chain

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