Research On Risk Decision Problem With CVaR Constraints Under Reward Strategy

With the rapid growth of economic, high market competition and more characteristic and diverse consumers'demand, these changes have forced supply chain participants to seek a new marketing strategy to shorten the delivery time, improve products quality, reduce operational costs and improve services. In order to enhance competition, avoid risk and occupy a larger market share, the upstream supply chain enterprises often set rewarding strategy, quantity discount policy and other means to encourage downstream enterprises to reach a situation of risk-sharing and profit sharing. Under this background, the supply chain risk management emerged. Supply chain participants realize that the expected profit maximization is not the only goal, and they must strengthen their risk management capabilities.Based on the literature review of the supply chain risk management, this paper researches a new marketing model named rewards strategy of two-stage supply chain which consists of a retailer and a supplier. We believe that the fundamental cause of the risk of retailers and suppliers is the uncertainty of customers'demand and the imbalance between supply sides and demand sides. The main work of this paper is as follows:1. Based on the CvaR constraints, this paper researches the single-stage retail risk decision problem under reward strategy. Based on the analysis of the retailer's profit function and loss function, the minimum retail's loss CvaR risk decision model and the maximum profit risk decision model with the constraints of the loss CvaR beyond the acceptable level are established. The result shows that retailers can increase the number of ordering products and improve profits when the reward factor is bigger, the loss on returned unsold goods is smaller and the capacity of risk bearing is stronger.2. Based on the CvaR constraints, this paper researches two-stage Retailer, deciding order quantity and supplier, deciding wholesale price, joint risk decision making problem. This paper assumes that demand information is public. Based on the analysis of the supplier's profit function and loss function. Two bilevel joint risk decision-making models are established. One is the minimum retailer's loss CvaR and the maximum supplier's expectable profit with the loss constraint, the other is the maximum retailer's expectable profit with the constraint of loss CvaR beyond acceptable level and the maximum supplier's expectable profit with the loss constraint. Through the numerical experiments with MATLAB7.01, It is proved that the two models can solve the joint risk decision problem among the supply chain participants. The final sensitivity analysis shows that all participants in the supply chain can increase profits by cooperation, while the loss of both are serious because of the vicious cycle.