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Fit revelation strategy in a supply chain with two types of consumers

  • * Corresponding author: Jing Shi

    * Corresponding author: Jing Shi

The author is supported in part by (ⅰ) the National Natural Science Foundation of China under Grants 71601111 and 71774109. (ⅱ)the Natural Science Foundation of Shanghai under Grant 18ZR1416900. (ⅲ) the Shanghai Key Basic Research Program under Grant 15590501800. (ⅳ) the Ministry of Education of Humanities and Social Science project under Grant 17YJCZH054

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  • This paper develops a game theoretical model for a supply chain consisting of one manufacturer and one retailer who chooses one of two strategies: implementing fit revelation or not implementing fit revelation. Firstly, the fit revelation strategy of the retailer in the decentralized supply chain is analyzed. When the market scale is medium, the fit revelation strategy is implementing fit revelation and only good-fit consumer will buy the product; otherwise, it is not implementing fit revelation. The results are counterintuitive because people may believe that it would be better to let consumers know more information about the product when the market scale is low. Implementing fit revelation is not always beneficial for consumers. When the market scale is sufficiently low, good-fit and bad-fit consumers both prefer not implementing fit revelation. Secondly, the paper also considers the case in which the manufacturer decides whether to implement fit revelation. Sometimes, the retailer and the manufacturer prefer themselves to facilitate fit revelation. Thirdly, the effect of decentralization is investigated. Numerical examples show that the interval in which implementing fit revelation is optimal is larger under the centralized setting than that under the decentralized setting. The decentralization decreases the probability to implement fit revelation.

    Mathematics Subject Classification: Primary: 91A10; Secondary: 90B50.


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  • Figure 1.  The profit of each member when different members facilitate fit revelation

    Figure 2.  The upper bound and lower bound versus the proportion of bad-fit consumer

    Figure 3.  The upper bound and lower bound versus the loss of bad-fit consumer

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