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Optimal retailer’s pricing and replenishment policies and supplier’s delay-in-payments policy considering fairness concerns under permissible delay in payments is studied in this paper. A model of Stackelberg game between the fairness neutral supplier and the fairness concerned retailer is developed. A numerical example is given to verify the validity of the proposed model and conduct sensitivity analysis on parameters. The results show that, with the increase of the retailer’s fairness concerns, the retailer should lower the price, increase the order quantity, and the supplier's optimal delay-in-payments should be shortened; when the fairness concerns coefficient satisfies certain conditions, the utility of the retailer and supplier is higher than without fairness concerns.

Study On Inventory Model Considering Fairness Concerns Under Permissible Delay In Payments