Service capacity procurement in logistics service supply chain with demand updating and reciprocal behaviour

This paper builds a logistics service supply chain consisting of a logistics service integrator (LSI) and a functional logistics service provider (FLSP), where they collaborate with a reciprocity contract. We aim to analyse the impact of reciprocity on the supply chain members' two-stage service capability procurement decisions under demand updating through a multi-method, combining game theory and a case study. We find that a reciprocity contract could provide a win-win situation and coordinate the supply chain when reciprocity factors are in an appropriate range. Moreover, the reciprocal behaviour of LSI can promote the reduction of wholesale prices, and the reciprocal behaviour of FLSP will increase the purchasing quantity as well as bring forward the purchasing time point of LSI. Lastly, the reciprocal behaviour of both parties is mutually reinforcing; that is, when one party increases its own reciprocity factor, the other party also increases its reciprocity factor as a return. [Received: 30 September 2018; Accepted: 11 February 2020]

Automated summary

This study analyses the impact of reciprocity on a logistics service supply chain, finding that a reciprocity contract can promote coordination and achieve a win-win situation. The reciprocal behavior of LSI and FLSP affects wholesale prices, purchasing quantity, and time point, and the reciprocity behavior of both parties is mutually reinforcing.