The Coordination Of Risk-averse Retailer's Supply Chain Under Three Contracts

In the actual operation of the supply chain,the supply chain is inevitably faced with the operational risks such as the risk of uncertain supply,the demand for uncertainty and the risk of information asymmetry.Since ancient times,people have the "benefit-tending and harm-avoiding" mentality.Therefore,in reality,the decision-makers are not only concerned about whether they can get the maximum profit,but also hope to get a profit when the risk is small.Based on the above situation,in this paper using the weighted average of conditional value-at-risk and expected profit as the utility function of risk-averse retailer,we consider the coordination problem of a two-echelon supply chain with a risk-neutral supplier and a risk-averse retailer under the option contract,the feedback and punishment contract and the revenue sharing contract.The main contents include:(1)The coordination of two echelon supply chain with risk averse retailer under option contract is studied.Firstly,we establish a centralized decision model.In the centralized decision model,we considered the risk aversion behavior of the supply chain system.And by using the mathematical method to analyze the above model,we get the optimal ordering strategy for the risk averse supply chain system and use it as a coordination standard.Second,we set up the supply chain coordination model based on the option contract.By analyzing the optimal order quantity of the retailer under the option contract and the optimal order quantity of the supply chain system in the centralized decision model,we find that choosing the appropriate contract parameters,the utility of the retailer and the supply chain system can be maximized at the same time,and the supply chain can be coordinated.Finally,the theoretical results are verified by numerical examples and when the supply chain is coordinated,we have the following conclusions:the risk aversion behavior of the supply chain system will reduce the optimal order quantity of the system;the risk aversion behavior of the supply chain system will worsen the expected utility of the retailer,and instead increase the supplier's expect profit;the risk aversion behavior of the supply chain system will increase the option price and reduce the execution price of the option;the optimal order quantity of the retailer is independent of the value of the contract parameter and depending on the degree of risk aversion of the decision maker.(2)The coordination of two echelon supply chain with risk averse retailer under the feedback and punishment contract is discussed.Firstly,we set up the supply chain coordination model based on the feedback and punishment contract.And by using the mathematical method to analyze the above model,we get the optimal ordering strategy for the risk averse supply chain system and the retailer.We discuss the coordination of the supply chain with feedback and punishment contract,and give the conditions that the contract parameters should be satisfied when the perfect coordination of this type of supply chain is realized.Finally,the theoretical results are verified by numerical examples and when the supply chain is coordinated,we can find:the risk aversion of the supply chain system will reduce the optimal order quantity of the system;the risk aversion of the supply chain system deteriorates the expected utility of the retailer,but increases the expected profit of the supplier;the expected utility of the retailer decreases with the increase in the sales target set by the supplier,and the expected profit of the supplier increases as the sales target increases;the optimal order quantity of the retailer is independent of the value of the contract parameter and depending on the degree of risk aversion of the decision maker.(3)The coordination of two echelon supply chain with risk averse retailer under the revenue sharing contract is studied.Firstly,we set up the supply chain coordination model based on the revenue sharing contract.Through the method of mathematical analysis,we get the optimal solution of the model.We discuss the coordination of the supply chain with revenue sharing contract,and show that the utility of the retailer and the supply chain system can be maximized at the same time,and the supply chain can be coordinated,when the revenue sharing contract parameters satisfy certain conditions.Finally,the theoretical results are verified by numerical examples and when the supply chain is coordinated,we have the following conclusions:the risk aversion behavior of the supply chain system will reduce the optimal order quantity of the system;the risk aversion behavior of the supply chain system will worsen the expected utility of the retailer,and instead increase the supplier's expect profit;the risk aversion behavior of the supply chain system will increase the proportion of retailer's retained profits;the optimal order quantity of the retailer is independent of the value of the contract parameter and depending on the degree of risk aversion of the decision maker.