The optimal ordering quantity model under the uncertain food safety environment with a risk aversion concept

Abstract

Under the deterioration of the food safety environment of food suppliers and the uncertainty of the food safety of the purchased food by individual manufacturers, this study aims to establish a mathematical model standard basis as a reference for decision evaluation on the optimal order quantity of food raw materials to satisfy the maximum expected returns, according to the food safety situations and market acceptance (optimistic/normal/pessimistic),thus affecting procurement costs and selling prices. Assume that product costs and selling prices under different market environments will change;at the same time, importers are allowed to urgent order processing when out of stock issues and surplus products will be sold at discounted prices. Under the importers' attitudes to risk aversion, mathematical models are established to meet the importers' maximum gain and maximum utility function of optimal order quantity decision.