Decision making under service-level contracts: The role of cost saliency

• 成果类型: Article
• 署名作者: Bolton, Gary E. E.; Bonzelet, Sabrina; Stangl, Tobias; Thonemann, Ulrich W. W.
• 署名单位: University of Texas System; University of Texas Dallas; University of Cologne
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13925
• 发表日期: 2023
• 页码: 1243-1261
• 关键词: Behavioral Operations; Experimental economics; service-level contracts

摘要

This study examines human ordering behavior in service-level inventory contracts, a class of contracts important in practice. Studies of wholesale price contracts find that people tend to place orders that are suboptimal and biased toward mean demand. Unlike wholesale price contracts, service-level contracts can be parameterized such that they have steep expected profit functions, making the expected profit-maximizing order more salient, in the sense that deviations from optimal ordering are more costly. Utilizing an analytical model and results from existing literature, we hypothesize that people will order closer to optimality under service-level contracts with steeper expected profit functions. In a laboratory experiment, we find that subjects achieve up to 97.2% supply chain efficiency under a steep service-level contract, compared with 92.2% under a flat service-level contract, and steep service contract ordering also exhibits lower variability. Our results suggest that managers can benefit by designing service-level contracts with higher penalty costs and lower fill rates.