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Research on Buy-Back Contract in Supply Chains Based on Mental Accounting Theory

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DOI: 10.4236/jssm.2016.93027    1,432 Downloads   1,919 Views
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ABSTRACT

Adopting the concept of mental accounting, the paper analyzes loss-aversion retailer’s optimal order quantity under buy-back contract in the two-stage supply chain, and proves the existence and uniqueness of the optimal order quantity. Conclusions show: under the certain degree of loss aversion, there exists a unique repurchase price to achieve supply chain coordination; meanwhile, the system’s optimal order quantity decreases with the retailer’s loss aversion and increases with the buy-back price.

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Zhang, X. (2016) Research on Buy-Back Contract in Supply Chains Based on Mental Accounting Theory. Journal of Service Science and Management, 9, 224-228. doi: 10.4236/jssm.2016.93027.

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