A BEHAVIORAL OPERATIONS MANAGEMENT STUDY OF MARKET POWER AND FUZZY RETURN

Abstract

This dissertation studies the market power and the investment in the supply chain in the first two studies and the return policy of the retailer in the third study.

In the first study, we study how the dominant market power impacts the investment decision in the supply chain. We build a dual-channel supply chain model with two players, one is OEM and one is CM. Our research centers on the dominant market power, either OEM side or CM side, changing the investment decision of OEM. We solve the game theory model based on the setting and conduct the lab experiment to test the hypothesis.

In the second study, we extend the first study and explore how less-dominant market power affects the investment in the supply chain. We set up the same omni-channel supply chain model. There are two players in the model, retailer and supplier. We extend the investment decision to have more possible projects. Furthermore, we set the market power to be a percentage between 0 and 1. Using game theory, we solve the model theoretical prediction. We build a lab experiment to test the theory and set up behavior models to explain human bias.

In the third study, we focus on the return policy set by the retailer. We study a special type of return in this study, which is the return from consumers that is outside the standard policy, yet not totally unacceptable. We call this type of return as a fuzzy return. We build a model to simulate the retailer and consumer decisions during this fuzzy return process. We solve the conditions for the retailer to choose different types of fuzzy return.