Study On Ordering And Pricing Decisions In A Supply Chain With Risk Preference Characteristic In A Price-sensitive And Stochastic Demand Environment

Because of the economic globalization, the diversification of customer demand and the progress of science and technology, the market competition is becoming increasingly fierce, and show new features constantly.First, market competition has the different competition mode. It means that the traditional competition which is between the single enterprises is converting to the competition between the supply chains, which requires the supply chain members to strengthen their cooperation. By this way, they can improve the supply chain’s overall competitiveness. However, different supply chain members usually belong to different economic entity, so they may always want to maximize their own benefit. This situation will lead to the loss of the whole supply chain. Second, along with the advance of enterprise’s productivity and the rapid development of information technology, the product market has gradually changed from the seller’s market into a buyer’s market during past two decades. Besides, as the increasing of way to get information, consumer’s behavior is becoming more and more rational and mature, which makes consumer more sensitive to the price of the product directly. Moreover, the mass production has been replaced by customized production mode gradually. Under this production mode, manufacturers find that it is hard to predict the market demand accurately. At the same time, the changes in demand which come from environment’s uncertainty enhance the difficulty of the decision. At last, enterprise in the global market is facing the consumer groups which are complex and heterogeneous. Besides, different kinds of enterprise and industries respond to their market uncertainty differently. We call it risk preference attitude in economics. Therefore, it is valued to study the supply chain with risk preference characteristic in price-sensitive random demand environment. Especially, this paper is about a supply chain which faces a price-sensitive Stochastic demand, so it is has important guiding significance in theoretical way.A lot of researches pervious that price-sensitive newsvendor model can achieve coordination by using supply chain contracts. However, none of them considered the supply chain with risk preference characteristic. On the basis of previous researches, this paper makes the following development:(1) In a supply chain with risk preference characteristic, we formulate a two-level supply chain decision model which includes a manufacturer and a retailer. This model studies the centralized supply chain’s decision under two types of random demand (addition form and multiplication form). By using the optimum theory, we analyze the model and find the optimum order and pricing decision of the centralized supply chain with risk preference characteristic. The author proves the existence and uniqueness of this optimal decision theoretically. Besides, this article also shows the necessary condition which keeps the optimal decision existence and unique.(2) This article also considered the optimal decision of a decentralized supply chain model by using the typical Leader-Follower game in which the manufacturer is the leader and the retailer is the follower. We find stackelberg equilibrium under this situation. At last, the author shows the contract parameter’s scope by a numerical example. The sensitivity analysis also shows that the supply chain risk preference has obvious influence on the contract parameter’s scope and supply chain efficiency.(3) On the basis of the decentralized supply chain, this article involves the revenue sharing contract. The results show that the supply chain can gain channel coordination by taking the revenue sharing contract which help them avoiding the loss of double marginalization.The results of the study show that, when a supply chain faces the addition and multiplication form random price-sensitive demand, we can find a unique optimal decision. Besides, the decentralized supply chain can achieve coordination by using supply chain contracts. In addition, the study also shows that risk attitude has effect on the supply chain efficiency and the supply chain contracts parameters. Therefore, as decision environment is becoming more and more complex, managers need to consider the characteristics of the market demand and the risk preference attitude of its members when they make a decision to achieve a win-win goal.