Decision And Coordination Of Dual-channel Supply Chain Dominated By Risk-averse Member With Demand Disruption

An increasing number of customers choose to shop on-line, which promotes the development of e-commerce. However, the intrinsic advantages of traditional sales channel protect itself from being replaced completely in a short run. As a consequence, many suppliers choose to sale online and offline simultaneously to fight for market shares and attract customers. Facing more and more large retailers to replace the suppliers’ strong position to become leaders in the supply chain gradually, direct sales channel has become an effective method for weak suppliers to get rid of the retailer’s control.The uncertainty of market demand is getting stronger due to the fierce market competition. It will also be intensified by emergencies. And, the complexity of the supply chain with dual-channel that is dominated by different channel members will cause more severe consequences. Additionally, in reality, most managers are risk-averse, their attitude to risk will be reflected in the decision. Especially, the risk attitude of the dominant will impact the decisions of the whole supply chain. Therefore, it is necessary and valuable to research the response measures of demand disruption in the dual-channel supply chain with different power structures and risk preference.Based on above reasons, three mathematical models classified the risk-averse dual-channel supply chain into three categories according to decision maker are built, i.e. centralized decision making, decentralized decision making dominated by risk-averse suppliers and decentralized decision making dominated by risk-averse by retailers. By solving the Karush-Kuhn-Tucker(KKT) conditions of supply chain manager’s maximum utility in each pattern, the optimal decisions before and after demand disruption are obtained. At the same time, we compare the decisions before and after demand disruption, and analyze the relationship with channel market share, the risk aversion coefficient of decision makers and the demand disturbance quantity. In the same time, the improved revenue sharing contract is established in order to coordinate the decentralized decision making mode of dual channel supply chain.The main conclusions of the study are: the optimal total production of the three models has robustness, within a steady range, the initial optimal production plan will not change, but different measures should be taken based on the market share of the two channels and the disruption degree when the disturbance is out of the steady range. The optimal pricing and the optimal distribution of sales need to adjust when the demand is disrupted is the linear function of the amount of the demand disturbances. And the effect on every variable of the coefficient of risk aversion will not change before and after the demand is disrupted. The sales stability of two channels is the same when the disturbance amplitude in steady range, otherwise, the sales stability is related to the channel of the market share. In addition, for the decision makers, the value of knowing the demand disturbances is closely related to the demand disturbance, the cost factor of disturbance and the risk aversion coefficient. The improved revenue sharing contract can coordinate the decentralized mode of supply chain, and the optimal coordination wholesale price when the demand is disrupted can be achieved on the basis of the optimal coordination wholesale price of the stable environment.These research results can provide theoretical foundation and decision-making guidance for dealing with demand disruption in dual-channel supply chain, which ensure supply chain managers take timely and appropriate measures under fierce and turbulent circumstances to keep the entire supply chain system operate well and performance optimal in any time.