Research On The Ordering Strategy Of Short-Life-Cycle Product Retailer In Supply Disruption Risk

As consumer demand diverses increasingly and products upgrade faster and faster,retailers not only have to meet consumer demand but also provide timely and accurate products for customers in serving the consumers directly.Especially for short-life-cycle products, because product sales season is often less than purchasing lead time, retailers don’t have time for the second order and have to decide the product order of this quarter on the basis of meeting consumer demand at the beginning of the season.We found that the retailer’s order decision can be influenced by retailer’s risk appetite,retailer’s service level constraints and supplier’s supply disruption risk.Retailer’s risk appetite influences the retailer’s order decision directly and retailers of different risk preference will choose different suppliers and order different quantity of products.Retailer’s service level constraint is one question that retailers have to consider for meeting consumer demand and building their own core competitiveness. Only when retailers try their best to meet consumer demand,can retailers exist and have the opportunity to develop, so retailers must adjust order quantity purposely according to service level constraint.Supply disruption risk forces retailers through reasonable emergency procurement strategy to avoid risk and meet consumer demand, which affects the order distribution between main supplier and backup supplier.It is of great practical significance to retailers to study from the above three factors.In order to solve the retailer’s practical problems in the inventory management and in the operation management,this paper studies the retailer’s order strategy as the critical part of inventory management and operation management.According to the logical mainline "determining the retailer’s risk appetite- considering the retailer’s service level constraint-introducing supplier’s supply disruption risk" and based on the theory of classical newsboy model, prospect theory and emergency procurement strategy,this paper analysizes progressively the ordering strategy of expectation-based loss-averse retailer, the ordering strategy of expectation-based loss-averse retailer under considering the service level constraint,and the ordering strategy of expectation-based loss-averse retailer under considering the service level constraint in supply disruption risk.The following mainconclusions are obtained:Both retailer’s loss aversion coefficient and retailer’s expectation level have a negative correlation with retailer’s optimal order quantity and retailer’s maximum expected utility,in others words,the stronger is the degree of loss aversion or the higher is the expectation level, retailer’s optimal order quantity will be smaller and retailer’s maximum expected utility will also be smaller.The influence of retailer’s service level constraint on retailer’s optimal order quantity and retailer’s maximum expected utility is segmented.When the service level constraint is small enough,retailer’s service level constraint has no effect on retailer’s optimal order quantity and retailer’s maximum expected utility.Only when the service level constraint exceeds a certain value,will the service level constraint play a role.In supply disruption risk,expectation-based loss-averse retailer under considering the service level constraint can achieve unique maximum expected utility when you order through the emergency procurement strategy.