The Supply Chain Robust Coordination Strategy Based on Data-Driven Approach

Abstract

The robust coordination of a two-stage supply chain with a risk-averse retailer and a risk-neutral supplier is studied under the condition of only knowing historical demand observation data. An objective function based on conditional value at risk is developed with respect to the risk-averse retailer, and the corresponding coordination mechanism for supply chain is designed with only knowing historical data of demand. A data-driven approach is applied to derive the robust coordination strategy. At last, a numerical calculation is done to verify the effectiveness of designed supply chain robust coordination strategy. The results show that data-driven approach can effectively cope with the supply chain risk deriving form demand uncertainty. Specially, when the distribution information of demand can be known, the supply chain robust coordination strategy based on data-driven can decrease risk-averse retailer's revenue, and to this at the same time it will increase supplier's revenue. However, the yield gap of whole supply chain system will be insignificant, which shows the effectiveness of data-driven approach in accounting for demand uncertainty.