SUPPLY CHAIN COORDINATION WITH CVaR CRITERION

Lei Yang (), Minghui Xu (), Gang Yu () and Hanqin Zhang ()
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Lei Yang: School of Economics and Commerce, South China University of Technology, Guangzhou, 510006, P. R. China;
Minghui Xu: School of Economics and Management, Wuhan University, Wuhan 430072, Hubei, P. R. China
Gang Yu: Department of Management Science and Information Systems, University of Texas, Austin, Texas 78712, USA
Hanqin Zhang: Academy of Mathematics and Systems Science, The Chinese Academy of Sciences, Beijing 100080, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2009, vol. 26, issue 01, 135-160

Abstract: We study the coordination of supply chains with a risk-neutral supplier and a risk-averse retailer. Different from the downside risk setting, in a conditional value-at-risk (CVaR) framework, we show that the supply chain can be coordinated with the revenue-sharing, buy-back, two-part tariff and quantity flexibility contracts. Furthermore the revenue-sharing contracts are still equivalent to the buy-back contracts when the retail price is fixed. At the same time, it is shown that the risk-averse retailer of the coordinated supply chain can increase its profit by raising its risk-averse degree under mild conditions.

Keywords: Supply chain coordination; newsvendor model; risk-aversion; supply contract; conditional value-at-risk (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:26:y:2009:i:01:n:s0217595909002109

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DOI: 10.1142/S0217595909002109

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