Quality Behavior Decision Model for Chinese Herbs Supply Chain with Bounded Rationality

This paper investigates a Chinese herbs supply chain where farmers have fairness concern and herbal medicine manufacturers have overconfidence. Four supply chain game models are constructed and solved to explore the impact of bounded rationality on the quality behavior decisions of supply chain members. The results show that the unit penalty threshold that makes the farmer abandon adulteration exists under all models. Overconfidence disadvantages the management of adulteration behavior, but can prompt the farmer’s profit increase. Fairness concern is a favorable factor for the management of adulteration, but it is detrimental to the profits of the farmer, the herbal medicine manufacturer, and the overall supply chain. The farmer would prefer the herbal medicine manufacturer with overconfidence, and the increase in the profit of the farmer would also result in the highest profit of the overall supply chain. Complete rationality for both parties is most favorable for the herbal medicine manufacturer.