Both Profits And Risks Of Supply Chain Research

In early period,research on supply chain management mainly focuses on the base of assumptions in risk-neutral case.Their goals are to choose the best decisions to maximaze the expected profit or minimize the expected cost.However,these study give people some guidance in theory but can’ot meet the reality requirements of decision-makers. People aren’t limited to concern the maximization of the expected profit,which they really care are the real gains they acquire by tradings eventually.Market diversification and complexity of the environment has brought more uncertainty.In turn,there is necessary for decisition makers to take the certainty of the expected profit and potential risks into account.This article is based on the assumption of risk aversion to launch the study of the optimal strategy of the decision-makers in the supply chain.Given the breadth and importance of risk,most research has focused on how people cope with and avoid risks, and it led to the generation of Mean-variance、VaR、CVaR and other risk measurement cuiteria.CVaR of which its own unique advantages is well received and widely used by people.However,if the decision-makers only use CVaR to control and measure the risk,they will often overlooked given the possibility of higher profits as the CVaR itself is conservative and cautious.In this paper,we used a weighted average expected profit and CVaR criteria which was proposed by Gotoh.J. and Seshadri in2005to measure the retailer’s taget profit,and then the retailers can avoid potential risks and they can also get higher profits at the same times.We also considered the impact of the retailer’s decision-making to supplier strategies in this case.And this paper propose the coordinate strategy of supply chain respectively in buy back contract and revenues sharing contract based on the decentralized decision-making and the starting point of sharing the market risk.We adopt Nash equlibrium Model to analyze the supply chain in decentralized decision-making,as for the supply chain in buy-back contract and revenue sharing contract is based on supply chain coordination to analyze the strategies of suppliers and retailers.The results show that the order quantity of risk-averse retailers to be less than the quantity when they are risk-neutral.We also find that when retailer concern more about the pursuit of profit,they will order more goods.The study in revenue sharing contract has shown that suppliers’degree of risk has a greater impact compared with retailers if they occupying the leadership of the supply chain.The degree of the suppliers’risk aversion has impact on the goods strategy of retailers,it can make retailers reduce the quality of goods when they are in the less sensitive to their risk,and it due to the suppliers with risk-aversion adjust the wholesale price to maximize themselves profit.