Altruistic preference for investment decisions in the logistics service supply chain

Abstract

In order to obtain the feasible condition that both the logistics service integrator (LSI) and functional logistics service provider (FLSP) have altruistic preferences, this paper establishes four investment decision models with Stackelberg game. It is found that supply chain coordination can not be achieved when both the LSI and FLSP have altruistic preferences, then the ex-post payment contract and 'revenue sharing + franchise fee' contract are proposed to solve this problem. Some important conclusions are found. First, when both the LSI and FLSP have altruistic preferences, the utilities of LSI and FLSP are higher than the utilities when only the LSI or FLSP has an altruistic preference. Second, both contracts can increase the utilities of LSI and FLSP when the range of altruistic preference coefficients meets a specific constraint. Third, when the LSI's altruistic preference degree is equal to the FLSP's altruistic preference degree, the supply chain profit can reach the highest level. [Received 1 October 2017; Revised 3 October 2017; Accepted 15 April 2018]