Wholesale Price for Supply Chain Coordination via Conditional Value-at-Risk Minimization
The theory of the conditional value-at-risk (CVaR) in financial risk management is considered in this paper to develop a model of supply chain coordination with a wholesale pricing policy. The proposed model solves the drawbacks of objective function in current supply chain coordination model. A numerical example is given to demonstrate the effectiveness of the proposed model. The following helpful conclusions are drawn from the paper: with the increase of the degree of risk averting for supply chain individual member, the optimal order quantity of supply chain is decreasing, while the optimal profit is decreasing; If supplier’s risk averting degree increases, supplier has to increase wholesale price to achieve supply chain coordination; If retailer’s risk averting degree increases, supplier has to decrease wholesale price to achieve supply chain coordination.
C. X. Wang "Wholesale Price for Supply Chain Coordination via Conditional Value-at-Risk Minimization", Applied Mechanics and Materials, Vols. 20-23, pp. 88-93, 2010