Abstract: The practice of dual sourcing is common among manufacturers and is considered an effective strategy to deal with the risk of supply disruptions, high costs, capacity limitations, and/or lead time variability. To negotiate better terms, firms often rely more on a primary supplier, resulting in uneven order allocations between suppliers in dual sourcing. However, suppliers may reject the order, that is, supply shortage can be caused by intentional refusal of the suppliers even though their supply capacity is sufficient to meet the order. Fairness concern is one of the major drivers for the observed order rejections. To mitigate this type of behavioral supply risk, we focus on the effect of order information on the fairness concern of suppliers.
To analyze the effect of order information on the fairness concern of dual-sourcing suppliers, this paper considers a supply chain consisting of a manufacturer and two suppliers. Two suppliers offer an incremental quantity discount policy. To benefit from discount, the manufacturer orders more from one supplier, which causes dissatisfaction of another supplier that receives a smaller order quantity. The small-order supplier’s concern of fairness may result in order rejection. We firststudy a normative model of order allocation game analytically and provide a theoretical benchmark. By designing and conducting behavioral experiments in laboratory, we compare the decision behaviors under two treatments. In one treatment, the order quantity is complete information, that is, each supplier can observe the order quantities that manufacturers allocated to both suppliers. In the other, the order quantity is private information, that is, each supplier only observes its own order quantity. We collect a total of 880 decisions for each role in complete information treatment and 1040 decisions in incomplete information treatment. We use the one-sample Wilcoxon signed-rank test to compare experimental results with theoretical predictions and the Wilcoxon-Mann-Whitney test to compare the two treatments’ experimental results. To explain the observations in experiment, we build behavioral models for both treatments. For the complete information treatment, we combine the ERC model and logit choice model. For the incomplete information treatment, we use perfect Bayesian equilibrium to analyze the decisions of manufacturers and suppliers. Maximum likelihood estimation is applied to estimate the parameters of the decision makers’ behavioral preferences.
Experimental data indicate that behavioral decisions of subjects deviate from the normative models’ predictions in both treatments. In experiment, the manufacturer allocates to the small-order supplier higher order quantities than the prediction, but these orders are frequently rejected. Comparing with complete information treatment, manufacturers allocate higher order quantities to the small-order supplier in incomplete information treatment, but the orders are rejected more often.All these experimental results are statistically significant. Identifying fairness concern as the main driver, our behavioral models and parameter estimation demonstrate that the suppliers show stronger fairness concern in the incomplete information treatment than in the complete information one. The behavioral models capture the subject’s decision process, and accurately predict the manufacturer’s order allocation and the supplier’s rejection behavior in experiment. This study shows that manufacturers should focus on the fairness concern of the small-order supplier to reduce order rejection. Keeping order information private as in the incomplete information treatment is not an effective way to mitigate the behavioral supply risk caused by fairness concern, and order information transparency is more effective.

Key words: fairness concern, dual sourcing, incomplete information, behavioral experiment

摘要： 为了研究订单信息对双渠道进货供应商公平偏好的影响,本文考察由一个制造商和两个同质供应商组成的双渠道进货供应链,其中供应商按照价格折扣给制造商供货。为了获取更多优惠,制造商将会给一个供应商分配尽可能多的订单,因而引起小订单供应商的不满。这种小订单供应商对公平的偏好可能导致其拒绝供货。通过设计和实施实验室实验,本文对比订单是完全信息和不完全信息两种情境下被试的决策行为倾向。实验结果表明,在两种情境下被试决策都偏离理论预期,公平偏好是造成这一现象的主要因素。供应商在不完全信息下表现出更强的公平偏好。基于实验所观察到的现象,分别建立了完全信息和不完全信息下的行为模型,并通过参数估计考察了它们的有效性。研究结论表明,在双渠道进货时应重点关注小订单供应商的公平偏好,不要故意隐藏订单信息。

关键词: 公平偏好, 双渠道进货, 不完全信息, 行为实验