Considering The Service Level And Risk Preference Of Retailers Ordering Strategy Research

Recently, as the diversity of demand is increasing gradually, the competition of the global market becomes increasingly fierce. This new market atmosphere, as a result, poses challenges to retail companies in our country. Facing the situation contains opportunities and challenges both, retail enterprises should focus on their key node to improve their core competitiveness. And of course inventory management is one of the most important matters in business operating. It can’t be ignored that decision preference of retail companies does affect the inventory policy directly. Meanwhile, service becomes a key factor which influences the core competitiveness of retail enterprises and thus retails have to think about how to satisfy the demand of customer and enhance service level in their operation. Therefore, the study of the influence on the strategies of the retailers, based on the angle of service level, possesses important practical significance.The research focused on the key link of retail industry in operating that is ordering policy in order to solve the problems in reality. The logic thread of this paper is "determining risk preference-importing service level-obtaining optimal policy". Theoretical basis are newsboy model and forecasting theory. The research is focus on the optimal ordering policy of retail enterprises under risk neutral and risk aversion. Then we get the main conclusion that is the optimal order quantity of risk aversion retailers is always less than ones whose decision preference is risk neutral in order to withstand the losses. Moreover, risk aversion factor does the adverse effect on the optimal order quantity and expected utility. That is, the bigger risk aversion factor, the less optimal order quantity and expected utility of retailers.