The Supply Chain Coordination of Risk Preferred Retailer Under Information Asymmetry

Abstract

Abstract In most instances, the information held by members of the supply chain is asymmetric and many retailers prefer pursuing risk. This paper uses revenue sharing contract to coordinate the two-stage supply chain consisting of a risk preferredretailer and a risk neutral manufacturer, which takes into account the shortage cost and residual value. In the case of information symmetry and information asymmetry, this paper establishes the two-stage supply chain of a risk-preferred retailer using CVaR risk measurement. The supply chain coordination is achieved by adjusting the unit product’s profit parameters, which the manufacturers return to the retailers in the revenue sharing contract. The results show that the profit parameter is positively correlated with the risk preference of the retailer, which means that the risk preference of the retailer is high and the profit parameter is high.