Research on CVaR model of supply chain with emergency ordering in selling season

Abstract

The problem is studied for a class of retailer and supplier with risk aversion in a supply chain. By developing a CVaR model, the optimal decisions of the supply chain are presented, where we consider the management mode of emergency order and random demand of the market status. Firstly, by applying the sub-additivity of CVaR method, the CVaR models of the retailer, supplier and the entire supply chain are established based on negative return. Secondly, aiming at the different scope of the risk value of enterprise, the optimal pre-season ordering quantities of the retailer, supplier and the entire supply chain are discussed. To achieve the supply chain coordination, the retailer's optimal pre-season ordering quantities is consistent with the entire supply chain's, then, the supplier's optimal emergency wholesale price in the selling season is presented. The sensitivity of the optimal emergency wholesale price in the selling season to the parameters is analyzed. Finally, the effectiveness and the change along with the parameters of the optimal decisions of supply chain are illustrated by a numerical example.