Abstract: In this paper, a dynamic equilibrium of a supply chain network, in which the demand is time-varying and random, is studied. Since the demand is uncertain and seasonal, the retailers in the network consider the negative effect of under-stock regret and over-stock regret, and make their optimal decisions based on long-term regret aversion. The optimal decision behaviors of manufactures, retailers considering the long-term regret aversion and demand markets are modeled by the variational inequalities. Numerical examples are given in three long-term regret cases to find the effect of retailers' long-term regret aversion on the equilibrium order quantities, profits and regret values. The results show that the equilibrium order quantities, profits and regret values are different when the degree of retailers' regret aversion are in the increasing case, unchanging case, and decreasing case. These conclusions can provide supposes for the decision makers of the supply chain network to make the best decisions considering the long-term regret aversion.

Key words: supply chain network, dynamic equilibrium, regret aversion, long-term