Ordering behavior under supply risk: An experimental investigation

Manufacturing and Service Operations Management

Volumn 16, Issue 1, 2014, Pages 61-75

  Gurnani, Haresh ^a   Ramachandran, Karthik ^b   Ray, Saibal ^c   Xia, Yusen ^d  

^a UNIVERSITY OF MIAMI   (United States)

^b GEORGIA INSTITUTE OF TECHNOLOGY   (United States)

^c MCGILL UNIVERSITY   (Canada)

^d GEORGIA STATE UNIVERSITY   (United States)

Author keywords

Bounded rationality; Disruption management; Diversification bias; Experiments; Ordering behavior; Supply risk management

Indexed keywords

EID: 84893973261     PISSN: 15234614     EISSN: 15265498     Source Type: Journal    
DOI: 10.1287/msom.2013.0453     Document Type: Article

References (50)

1. Anderson JC, Thomson JBL, Wynstra F (2000) Combining value and price to make purchase decisions in business markets. Internat. J. Res. Marketing 17(4):307-329.
2. Anderson SP, de Palma A, Thisse JF (1992) Discrete Choice Theory of Product Differentiation (MIT Press, Cambridge, MA).
3. Babich V, Burnetas AN, Ritchken PH (2007) Competition and diversification effects in supply chains with supplier default risk. Manufacturing Service Oper. Management 9(2):123-146.
4. Becker-Peth M, Katok E, Thonemann UUW (2013) Designing buyback contracts for irrational but predictable newsvendors. Management Sci. 59(8):1800-1816.
5. Benartzi S, Thaler RH (2001) Naive diversification strategies in defined contribution saving plans. Amer. Econom. Rev. 91(1): 79-98.
6. Bendoly E, Croson R, Goncalves P, Schultz K (2010) Bodies of knowledge for research in behavioral operations. Production Oper. Management 19(4):434-452.
7. Ben-Zion U, Cohen Y, Peled R, Shavit T (2008) Decision-making and the newsvendor problem: An experimental study. J. Oper. Res. Soc. 59(9):1281-1287.
8. Bolton GE, Katok E (2008) Learning by doing in the newsvendor problem: A laboratory investigation of the role of experience and feedback. Manufacturing Service Oper. Management 10(3):519-538.
9. Braunscheidel MJ, Suresh NC (2009) The organizational antecedents of a firm's supply chain agility for risk mitigation and response. J. Oper. Management 27(2):119-140.
10. Carter JR, Maltz A, Yan T, Maltz E (2008) How procurement managers view low cost countries and georgraphis: A perceptual mapping approach. Internat. J. Physical Distribution Logist. Management 38(3):224-243.
11. Casella G, Berger RL (2001) Statistical Inference, 2nd ed. (Duxbury Press, Pacific Grove, CA).
12. Croson R, Donohue K (2006) Behavioral causes of the bullwhip effect and the observed value of inventory information. Management Sci. 52(3):323-336.
13. Dada M, Petruzzi NC, Schwarz LB (2007) A newsvendor's procurement problem when suppliers are unreliable. Manufacturing Service Oper. Management 9(1):9-32.
14. Ellis SC, Henry RM, Shockley J (2010) Buyer perceptions of supply disruption risk: A behavioral view and empirical assessment. J. Oper. Management 28(1):34-46.
15. Fink R (2011) Supply chain woes widen. Wall Street Journal (April 20), https://blogs.wsj.com/cfo/2011/04/20/supply-chain-woes-widen/.
16. Fox CR, Ratner RK, Lieb DS (2005) How subjective grouping of options influences choice and allocation: Diversification bias and the phenomenon of partition dependence. J. Experiment. Psych.: General 134(4):538-551.
17. Gavirneni S, Xia Y (2009) Anchor selection and group dynamics in newsvendor decisions-A note. Decision Anal. 6(2):87-97.
18. Gumus M, Ray S, Gurnani H (2012) Supply-side story: Risks, guarantees, competition, and information asymmetry. Management Sci. 58(9):1694-1714.
19. Gurnani H, Shi M (2006) A bargaining model for a first-time interaction under asymmetric beliefs of supply reliability. Management Sci. 52(6):865-880.
20. Gurnani H, Akella R, Lehoczky J (2000) Supply management in assembly systems with random yield and demand. IIE Trans. 32:701-714.
21. Harrison GW, Moritz S, Pibernik R (2009) How does the risk attitude of a purchasing manager affect the selection of suppliers? Working paper, European Business School Research Paper 09-10, http://papers.ssrn.com/sol3/papers.cfm? abstract-id=1396169.
22. Hendricks KB, Singhal VR (2005) Association between supply chain glitches and operating performance. Management Sci. 51:695-711.
23. Ho TH, Zhang J (2008) Designing pricing contracts for boundedly rational customers: Does the framing of the fixed fee matter? Management Sci. 54(4):686-700.
24. Jiang B, Baker RC, Frazierb GV (2009) An analysis of job dissatisfaction and turnover to reduce global supply chain risk: Evidence from china. J. Oper. Management 27(2):169-184.
25. Kalkanci B, Chen K-Y, Erhun F (2011) Contract complexity and performance under asymmetric demand information: An experimental evaluation. Management Sci. 57(4):689-704.
26. Katok E, Wu D (2009) Contracting in supply chains: A laboratory investigation. Management Sci. 55(12):1953-1968.
27. Kraljic P (1983) Purchasing must become supply management. Harvard Bus. Rev. (September), 109-117.
28. Loch CH, Wu Y (2008) Social preferences and supply chain performance: An experimental study. Management Sci. 54(11): 1835-1849.
29. Lurie N, Swaminathan JM (2009) Is timely information always better?: The effect of feedback frequency on performance and knowledge acquisition. Organ. Behav. Human Decision Processes 108(2):315-329.
30. Miller JW (2010) Flight ban takes toll on some sectors. Wall Street Journal (April 21), http://online.wsj.com/article/ SB10001424052748704448304575196270378295464.html.
31. Prasnikar V, Roth AE (1992) Considerations of fairness and strategy: Experimental data from sequential games. Quart. J. Econom. 107(3):865-888.
32. Puljic M (2010) The influence of cognitive biases on managerial perceptions of supply chain risk. Dani S, ed. Proc. 10th Internat. Res. Seminar on Supply Chain Risk Management (Loughborough University, Loughborough, UK).
33. Read D, Loewenstein G (1995) Diversification bias: Explaining the discrepancy in variety seeking between combined and separated choices. J. Experiment. Psych.: Appl. 1(1):34-49.
34. Roth AE, Erev I (1995) Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term. Games Econom. Behav. 8(1):164-212.
35. Schweitzer ME, Cachon GP (2000) Decision bias in the newsvendor problem with a known demand distribution: Experimental evidence. Management Sci. 46(3):404-420.
36. Shanks DR, Tunney RJ, McCarthy JD (2002) A re-examination of probability matching and rational choice. J. Behav. Decision Making 15(3):233-250.
37. Siegel S (1964) Choice, Strategy, and Utility (McGraw-Hill, New York).
38. Simonson I (1990) The effect of purchase quantity and timing on variety-seeking behavior. J. Marketing Res. 27(2):150-162.
39. Smith ME (2009) Psychological foundations of supply chain risk management. Zsidisin GA, Ritchie B, eds. Supply Chain Risk, International Series in Operations Research and Management Science, Vol. 124 (Springer, New York), 219-233.
40. Sodhi MS, Son B-G, Tang CS (2012) Researchers' perspectives on supply chain risk management. Production Oper. Management 21(1):1-13.
41. Stone ER, Yates JF, Parker AM (1994) Risk communication: Absolute versus relative expressions of low-probability risks. Organ. Behav. Human Decision Processes 60(3):387-408.
42. Su X (2008) Bounded rationality in newsvendor models. Manufacturing Service Oper. Management 10(4):566-589.
43. Tang CS (2006) Perspectives in supply chain risk management: A review. Internat. J. Production Econom. 103(2):451-488.
44. Thaler RH (1999) Mental accounting matters. J. Behav. Decision Making 12(3):183-206.
45. Tomlin B (2009) Disruption-management strategies for short lifecycle products. Naval Res. Logist. 56(4):318-347.
46. Tomlin B, Wang Y (2005) On the value of mix flexibility and dual sourcing in unreliable newsvendor networks. Manufacturing Service Oper. Management 7(1):37-57.
47. Wagner SM, Bode C (2008) An empirical examination of supply chain performance along several dimensions of risk. J. Bus. Logist. 29(1):307-325.
48. Yang Z, Aydin G, Babich V, Beil DR (2009) Supply disruptions, asymmetric information, and a backup production option. Management Sci. 55(2):192-209.
49. Yu H, Zeng AZ, Zhao L (2009) Single or dual sourcing: Decisionmaking in the presence of supply chain disruption risks. Omega 37(4):788-800.
50. Zsidisin GA (2003) A grounded definition of supply risk. J. Purchasing Supply Management 9(5):217-224. Canada