scholarly journals Optimal Decisions of a Supply Chain with Two Risk-Averse and Competing Retailers under Random Demand

2013 ◽  
Vol 2013 ◽  
pp. 1-10 ◽  
Author(s):  
Yu-Shuang Liu
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Conditional Value At Risk ◽  
Stackelberg Games ◽  
Risk Averse ◽  
Demand Model ◽  
Retail Competition ◽  
Decentralized Supply Chain ◽  
Optimal Decisions ◽  
Channel Efficiency

This paper investigates the optimal decisions in a decentralized supply chain consisting of one manufacturer and two competing retailers who face price-sensitive and stochastic demand. The retailers are risk averse with conditional value at risk (CVaR) as their risk measure, and the manufacturer is a risk-neutral agent. We construct manufacturer-Stackelberg games with retailers, who engage in horizontal price competition. For the multiplicative demand model and expected demand as an exponential function of both prices, we show that there exists the optimal pricing-ordering joint decision uniquely. We then explore the influence of the price sensitivity, risk aversion, and retail competition on optimal decisions and channel efficiency. The results show that retail competition contributes to manufacturer and improves channel efficiency of the decentralized supply chain. When the retailers are more risk averse, the channel efficiency becomes much lower. However, the level of retailers’ risk aversion has no significant impact on the manufacturer’s optimal wholesale price and retailer’s optimal selling price.

scholarly journals Trade Credit and Revenue Sharing of Supply Chain with a Risk-Averse Retailer

2021 ◽  
Vol 2021 ◽  
pp. 1-15
Author(s):  
Caiyun Liu ◽  
Kebing Chen ◽  
Mingxia Li ◽  
Haijie Zhou
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Value At Risk ◽  
Trade Credit ◽  
Revenue Sharing ◽  
Conditional Value At Risk ◽  
Optimal Decision ◽  
Risk Averse ◽  
Credit Period ◽  
Optimal Decisions

In this paper, we develop three supply chain game models, i.e., the basic model, the single trade credit model, and the trade credit and revenue sharing collaboration model. Conditional value-at-risk (CVaR) criterion is used as the measure of risk assessment in these models. We analyze the optimal decisions in the centralized and decentralized situations, respectively, and verify that single trade credit cannot coordinate the supply chain. However, the collaboration contract can coordinate the supply chain. Furthermore, this paper explores the influence of risk-aversion factor, trade credit period, revenue sharing coefficient, and other parameters on the optimal decisions and studies the feasible range of Pareto improvement in the collaborative model. In numerical experiments, the results show that the decisions and profits of both the manufacturer and the retailer reply on the degree of the risk aversion, the trade credit period, and the revenue sharing coefficient. The collaborative contract effectively improves supply chain performance and achieves a ‘win-win’ situation for the supply chain members. In addition, we also consider two extensions for our research. One extension shows that the collaborative contract of trade credit and buyback can also coordinate the supply chain in a certain range. The other extension considers the optimal decision of a risk-averse manufacturer with CVaR.

Coordinating Supply Chain with Buy-Back Contracts in the Presence of Risk Aversion

2018 ◽  
Vol 35 (02) ◽  
pp. 1840008 ◽  
Author(s):  
Chunlin Luo ◽  
Xin Tian ◽  
Xiaobing Mao ◽  
Qiang Cai
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Value At Risk ◽  
Performance Measure ◽  
Expected Profit ◽  
Conditional Value At Risk ◽  
Allocation Rule ◽  
Risk Averse ◽  
Buy Back ◽  
The Impact

This paper addresses the operational decisions and coordination of the supply chain in the presence of risk aversion, where the risk averse retailer’s performance is measured by a combination of the expected profit and conditional value-at-risk (CVaR). Such performance measure reflects the desire of the retailer to maximize the expected profit on one hand and to control the downside risk of the profit on the other hand. The impact of risk aversion on the supply chain’s decision and performance is also explored. To overcome the inefficiency due to the double marginalization and the aggravation resulting from risk aversion, we investigate the buy-back contract to coordinate the supply chain. Such contract can largely increase the supply chain’s profit, especially when the retailer is more risk averse. Lastly, we extend such risk measure to the widely-used business model nowadays — platform selling model, and explore the impact of the allocation rule on the manufacturer’s decision.

scholarly journals Research on the Maritime Logistics Pricing Model of Risk-Averse Retailer-Dominated Dual-Channel Supply Chain

2018 ◽  
Vol 25 (s2) ◽  
pp. 107-116
Author(s):  
Qing Fang ◽  
Zeping Tong ◽  
Liang Ren ◽  
Ao Liu
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Wholesale Price ◽  
Risk Averse ◽  
Market Demand ◽  
Maritime Logistics ◽  
Decentralized Supply Chain ◽  
Dual Channel ◽  
On Line ◽  
Dual Channel Supply Chain

Abstract Price decision is studied in a risk-averse retailer-dominated dual-channel supply chain, which consisting of one manufacturers and one retailer with both off-line and on-line channels. Firstly, two mean-variance models in centralized and decentralized supply chain are established. Secondly, the optimal solutions under the two decision modes are compared and analyzed. The results shows that the price of dual-channel of retailer decreased with the increase of retailers’ risk- aversion coefficient and the standard deviation of the fluctuation of market demand, while the wholesale price changes is on the contrary; in addition, when the market demand is greater than a certain value, the prices of dual channel are correspondingly higher in decentralized supply chain than in centralized supply chain, and vice versa. In addition, when the retailer’s risk aversion is in a certain interval, the expected utility of the whole supply chain is greater in centralized supply chain than in decentralized decision, and vice versa. Finally, a numerical example is given to verify the above conclusions.

scholarly journals Optimal Decision of Deferred Payment Supply Chain considering Bilateral Risk-Aversion Degree

2018 ◽  
Vol 2018 ◽  
pp. 1-11 ◽  
Author(s):  
Liu Liang ◽  
Li Futou
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Wholesale Price ◽  
Conditional Value At Risk ◽  
Optimal Order ◽  
Risk Averse ◽  
Order Quantity ◽  
Initial Capital ◽  
Optimal Order Quantity ◽  
Degree Of Risk

This paper aims to fill up the gap that the previous research has never explored, the deferred payment supply chain with a risk-averse supplier. To this end, the conditional value-at-risk (CVaR) was adopted as a criterion to measure the influence of retailer’s deferred payment on supply chain performance. According to this criterion, the retailer’s optimal order quantity and the supplier’s optimal wholesale price per unit product were investigated under decentralized decision-making. Then, the existence of a unique optimal strategy was discussed for risk-averse supplier and retailer, and the values of risk-averse, initial capital, and wholesale price were calculated in detail. Finally, the theoretical results were testified through a numerical example. It is concluded that retailer’s optimal order quantity is negatively correlated with the wholesale price, initial capital, and degree of risk aversion, so that the retailer can benefit through proper risk aversion; the supplier’s expected profit decreases with the increase in the degree of risk aversion, yet the optimal wholesale price is determined by the degree of risk aversion of supplier and retailer. The research findings shed valuable new light on how to manage a supply chain involving risk-averse supplier and retailer.

Supply Chain Coordination with a Risk-Averse Retailer and a Combined Buy-Back and Revenue Sharing Contract

2019 ◽  
Vol 36 (05) ◽  
pp. 1950028 ◽  
Author(s):  
Han Zhao ◽  
Shiji Song ◽  
Yuli Zhang ◽  
Jatinder N. D. Gupta ◽  
Anna G. Devlin ◽  
...  
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Value At Risk ◽  
Numerical Experiments ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Conditional Value At Risk ◽  
Risk Averse ◽  
Mild Conditions ◽  
Buy Back

This paper investigates the ability of a combined buy-back (BB) and revenue sharing (RS) contract to improve the efficiency of a supply chain involving a risk-neutral supplier and a risk-averse retailer facing stochastic demand. We show that the combined contract can coordinate the supply chain under mild conditions. Further, the effects of risk aversion and contract parameters on the agents’ decision-making are analyzed when the retailer’s risk aversion is modeled by the conditional value-at-risk (CVaR) criterion. In contrast to individual BB and RS contracts, the combined contract is able to mitigate the effect of risk-aversion and allow the supplier to obtain higher expected profit. Moreover, situations exist where the combined contract can coordinate the supply chain when neither the BB nor the RS contract can coordinate it. Numerical experiments conducted further confirm the analytical results derived.

scholarly journals Supply Chain Coordination with a Risk-Averse Retailer and the Call Option Contract in the Presence of a Service Requirement

Mathematics ◽  
2021 ◽  
Vol 9 (7) ◽  
pp. 787
Author(s):  
Han Zhao ◽  
Hui Wang ◽  
Wei Liu ◽  
Shiji Song ◽  
Yu Liao
Keyword(s):  
At Risk ◽  
Supply Chain ◽  
Risk Aversion ◽  
Value At Risk ◽  
Conditional Value At Risk ◽  
Risk Averse ◽  
Call Option ◽  
Service Requirement ◽  
Option Contract ◽  
The Impact

This paper investigates a supply chain consisting of a single risk-neutral supplier and a single risk-averse retailer with the call option contract and a service requirement, where the retailer’s objective is to maximize the Conditional Value-at-Risk about profit. The optimal ordering quantity of the retailer and the optimal production quantity of the supplier are derived with the call option contract in the presence of a service requirement. Furthermore, by investigating the effect of the service level and the risk aversion on the supply chain, it is found that the retailer’s optimal Conditional Value-at-Risk is non-increasing in the service requirement and increasing in the risk aversion, while the supplier’s optimal expected profit is non-decreasing in the service and decreasing in the risk aversion. In addition, this paper demonstrates the impact of contract parameters on the service-constrained supply chain, and finds that the retailer’s optimal Conditional Value-at-Risk may be increasing, constant or decreasing in unit exercise price. Finally, with the call option contract, a distribution-free coordination condition is derived to achieve the Pareto improvement under Conditional Value-at-Risk criterion in the presence of a service requirement.

scholarly journals Coordination of Supply Chain with One Supplier and Two Competing Risk-Averse Retailers under an Option Contract

2016 ◽  
Vol 2016 ◽  
pp. 1-11 ◽  
Author(s):  
Rui Wang ◽  
Shiji Song ◽  
Cheng Wu
Keyword(s):  
Supply Chain ◽  
Conditional Value At Risk ◽  
Optimal Order ◽  
Pareto Optimum ◽  
Risk Averse ◽  
Order Quantity ◽  
Supply Chain System ◽  
Chain System ◽  
Option Contract ◽  
Optimal Order Quantity

This paper studies an option contract for coordinating a supply chain comprising one risk-neutral supplier and two risk-averse retailers engaged in promotion competition in the selling season. For a given option contract, in decentralized case, each risk-averse retailer decides the optimal order quantity and the promotion policy by maximizing the conditional value-at-risk of profit. Based on the retailers’ decision, the supplier derives the optimal production policy by maximizing expected profit. In centralized case, the optimal decision of the supply chain system is obtained. Based on the decentralized and centralized decision, we find the coordination conditions of the supply chain system, which can optimize the supply chain system profit and make the profits of the supply chain members achieve Pareto optimum. As for the subchain, we also find the coordination conditions, which generalize the results of the supply chain with one supplier and one retailer. Our analysis and numerical experiments show that there exists a unique Nash equilibrium between two retailers, and the optimal order quantity of each retailer increases (decreases) with its own (competitor’s) promotion level.

scholarly journals New Product Presale Strategies considering Consumers’ Loss Aversion in the E-Commerce Supply Chain

2021 ◽  
Vol 2021 ◽  
pp. 1-13
Author(s):  
Chongfeng Lan ◽  
Jianfeng Zhu
Keyword(s):  
Supply Chain ◽  
Correlation Coefficient ◽  
Loss Aversion ◽  
Strategic Behavior ◽  
New Products ◽  
New Product ◽  
Service Level ◽  
Expected Profit ◽  
Risk Averse ◽  
Optimal Decisions

New product presale is a strategic behavior of manufacturers to transfer inventory risks to consumers. The research purpose of this paper is to examine the presale discount, inventory, and service level decisions in an e-commerce supply chain, where the first period is the presale period and the second is the selling period for the new product. First, consumers were divided into two types—those who are risk averse and those who are not. Then, considering different presale discounts applied for new products, three presale strategy models were discussed: no-presale strategy, presale strategy with a moderate discount, and complete presale strategy, and the optimal decisions of e-commerce supply chain members were obtained under different valuations of the new product by consumers. Finally, the effects of the correlation coefficient between the numbers of the two types of consumers, the loss aversion degree of consumers, and the marginal profit in the sales period on the optimal discounted price and the maximum expected profit were analyzed. The conclusions of this article show that the presale strategy is not always optimal but depends on the parameters of the market and the type of consumers. For example, when the correlation coefficient between the two types of consumers is high, it is more profitable for the suppliers if they choose the presale strategy with a moderate discount, while e-commerce platforms tend to adopt the no-presale strategy. The optimal discounted price in the complete presale case is not necessarily lower than that in the moderately discounted presale case. If the marginal profit is high in the normal sales period or consumers are less averse to losses, suppliers are more likely to adopt the complete presale strategy. The research conclusions provide some theoretical reference for companies in the development of new product presale strategies in the e-commerce supply chain.

scholarly journals Optimal Decisions of a Supply Chain With a Risk-Averse Retailer and Portfolio Contracts

IEEE Access ◽  
2019 ◽  
Vol 7 ◽  
pp. 123877-123892 ◽  
Author(s):  
Han Zhao ◽  
Shiji Song ◽  
Yuli Zhang ◽  
Jatinder N. D. Gupta ◽  
Anna G. Devlin
Keyword(s):  
Supply Chain ◽  
Risk Averse ◽  
Optimal Decisions

scholarly journals Pricing and Coordination Strategy in a Green Supply Chain with a Risk-Averse Retailer

2019 ◽  
Vol 2019 ◽  
pp. 1-12
Author(s):  
Liyan Wang ◽  
Minghai Ye ◽  
Shanshan Ma ◽  
Yipeng Sha
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Numerical Analysis ◽  
Random Variable ◽  
Retail Price ◽  
Green Supply Chain ◽  
Green Product ◽  
Risk Averse ◽  
Coordination Strategy ◽  
Optimal Decisions

This paper addresses the pricing and coordination strategy in a green supply chain in which a manufacturer produces a green product and sells it to a risk-averse retailer. The product’s demand is a random variable influenced by the green level and the retail price. The problem is modeled in three different structures, a centralized and two decentralized models, in which the upstream manufacturer and the downstream retailer act as the channel leader, respectively. This paper presents the optimal decisions for all supply chain members, analyzes the effects of green degree and risk-averse coefficient on the supply chain members’ decision-making and their profits, and performs the numerical analysis. The results show that the green degree and the whole supply chain’s expected profits are highest in the centralized scenario, followed by the retailer-led scenario, and lowest under the manufacturer-led scenario; the green degree and the manufacturer’s expected profit increase with the risk-averse coefficient, no matter who dominates the channel; however, the risk-averse coefficient’s effects on the retailer’s expected utility and the retail price depends on who dominates the channel and on the greening investment parameter.

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