Joint Decision-Making On Inventory-Pricing For Risk Aversion Under Random Capacity

With the increasing complexity of the economic environment and the increasing uncertainty of supply,procurement management under unreliable supply has become a hot topic in current research.On the other hand,the joint decision-making of inventory and pricing is an important research content in operation management.The modeling and analysis of operation management with risk aversion has received a lot of attention in recent years.In this paper,we aim at profit maximization,consider the stochastic price-dependent demand,and study the joint decision-making problem of inventory and pricing with random capacity under the condition of risk aversion by introducing VaR and CVaR criteria.Firstly,we establish a joint decision model of inventory and pricing under the general demand function and random capacity.For the risk-neutral situation,the relevant properties of the objective function are studied by introducing the elasticity of the lost-sale rate,and the sufficient conditions for the existence and uniqueness of the optimal strategy are given.Secondly,under the VaR criterion,the joint decision-making problem of inventory and pricing with random capacity is studied.We transform it into a nonlinear optimization model with VaR constraints,and give the solution steps of the optimal inventory-pricing policy by using KKT conditions.Further,numerical analysis and comparison are performed.Finally,the joint decision-making problem of inventory and pricing with random capacity is studied under the CVaR criterion.The system of equations satisfied by the optimal pricing and order quantity is obtained by the CVaR criterion,and the reliable supply is proved to be a special situation of random capacity.Finally,the numerical analysis and comparison are also carried out.