Demand Uncertainty, Single-cycle Commodity Supply Chain Management

In literatures concerning supply chain management under random conditions, methods of either reducing cost or maximizing expectant profits are mostly adopted. However, strictly speaking, optimized decision-making aimed at achieving expectant values generally applies to supply chain system of long-term stability. Today's world, though, is characteristic of abundant single-cycle commodities, short sales cycle, and enormous demand fluctuation. In such a fast-changing environment, the supply chain system tends to fail to adapt itself to new market environment after several operations. Competitions among current Chinese corporation in various sectors are so fierce that their survival and success rests with low cost, quick response and high quality. With limited resources, they are expected to accomplish the task of "streamlining" by being more responsive to customer needs and offering them quality products and services. In this case, it is evidently inadequate to apply the method of objective optimization with the sole purpose in achieving expectant values. Consequently it is crucial to research on uncertainty control in decision-making model of supply chain management.In view of this, I intend to apply the theory of mean variance originated from economics to my research on supply chain management. First of all, by virtue of the traditional newsvendor model, my establishment of a Stagckberg game model will simulate a situation in which a supplier is confronted with two different retailers. I respectively analyze how needs uncertainty affects parties in supply chain system in the following two conditions. In the first case, two retailers' decision-making is based on their relevant needs and their expectation of maximizing profits. In the second case, however, their...