Optimal Option Ordering Strategies For Capital-Constraint Retailers Based On CVaR

With the development of customer’s demand for personalized and diversification,the uncertainty of market demand is more obvious.In the traditional supply chain contracts,such as the wholesale price contract,the retailers take the risk of demand uncertainty.Option contracts can improve the order of elasticity,so it is applied to the enterprise’s ordering strategy.Retailers are faced with financial constraints more or less in actual operating process.Many previous studies assume that retailers are risk-neutral.But duo to the financing cost along with the financing process,the operational risk increase accordingly.At this time,retailers are often risk-averse in different decision-making environments.They are not only concerned with the profit they can make,but are also concerned about the possibility of making the profit.Therefore,it is of significance to study how the retailers with capital constraint use the option contract to ordering under risk control model.This paper considers the effects of option contract、capital constraint and risk aversion on retailer’s ordering strategy.Firstly,the retailer’s ordering model is established under the wholesale price contract and the option contract.By comparing the two strategies,this paper discusses when the retailer will accept option contracts.Besides,whether the option contracts can promote the retailer to order more is also discussed.Secondly,on the basis of the above,considering the problem of retailer’s capital constraint,we separately establish the retailer’s decision model under the two kinds of situations of no financing and financing,discuss whether it is necessary to consider the retailer’s capital constraint and whether the financing will benefit the retailer.Finally,the retailer’s risk aversion degree is considered.This paper establishes the model based on CVaR to study optimal option ordering strategies for capital-constraint retailers.The zero point of the option ordering when the retailer will give up the option ordering is discussed.And the influences of the financing interest rate and the degree of risk aversion on the ordering strategy are considered synthetically.Through the research:(1)the zero point of retailers abandon option ordering is found.(2)And it is necessary to discuss the retailers’ capital constraint.For different financing rates and self-owned capital,condition of retailers with financing sometimes isn’t as good as non-financing.(3)The higher of risk aversion of the retailer is,the smaller the fixed order quantity,the option order quantity and the quantity under the wholesale price contract.But the total order quantity under option contract is larger than the order quantity under the wholesale price contract.Although the profit under the option contract is higher than the profit under wholesale price contract,but the advantage is on the decline.With the increase of the financing interest rate,the retailer will increase the fixed order quantity and reduce the option order quantity.