Research On Risk-averse Retailer’s Spot And Option Procurement Decision Under Fuzzy Demand

As an important type of physical market,innovative products have the characteristics of short life cycle,large demand uncertainty,and lack of sufficient historical data.Therefore,it is often difficult to describe the market demand distribution of innovative products with random theory.At the same time,the demand uncertainty of innovative products usually leads to an imbalance between supply and demand,which causes retailers a greater out-of-stock loss or product unsale risk,for which,retailers often exhibit risk-averse behavior and their risk-averse attitude further influences retailers’ procurement decisions.Therefore,this paper focuses on the characteristics of innovative products,uses fuzzy mathematics to study its market demand and combines spot and option contract to study risk-averse retailers ’optimal procurement decisions.The research object of this paper is a secondary supply chain system consisting of a supplier A,a supplier B and a retailer C,which supplies and sells innovative products.Supplier A provides spot product based on wholesale price contract,and supplier B provides call option contract.In view of the different characteristics of spot and option contract,this paper separately constructs a retailer’s single procurement model under fuzzy demand(including a single procurement spot model and a single option procurement model)and a retailer’s combined procurement model under fuzzy demand(spot and option combined procurement model).In the process of modeling and solving,this paper uses triangular fuzzy number of fuzzy mathematics to describe the fuzzy market demand of innovative products,uses the CVa R method to represent the profits of risk-averse retailer and applies credibility theory to solve the optimal procurement volume and retailer’s maximal profit under different procurement decisions.Finally,this paper analyzes the impact of different risk-averse degree,market demand ambiguity,contract parameters and other model parameters on retailer’s procurement decisions and profits to draw the optimal procurement decision that maximize retailer’s profits.The results show that there exists optimal procurement combination of spot and option under fuzzy demand that can maximizes retailer’s profit;the optimal combined procurement volume is between the fuzzy low value and fuzzy high value of the fuzzy market demand,the degree of market demand ambiguity and the combination of contract parameters affect the ratio of spot to option quantity;compared with a single procurement decision,the combination decision of spot and option can reduce the unit procurement cost,increase the flexibility of the number of procurement executions,and increase the matching degree between supply and demand to futher increase the maximum profits;compared with risk-neutral retailer,the risk-averse retailer’s decision-making behavior under fuzzy demand is more conservative and abtains lower profits.This paper takes electronic products as object in numerical example and the model of this paper can also be extended to other innovative products with short life cycles,fast product updates,and large fluctuations in demand,such as fashion and toys.