Research On Supply Chain Product Quality Investment And Price Strategy Based On Retailer Risk Aversion

With the increasing diversification and personalization of market demands,more and more manufacturing companies have adopted order-oriented manufacturing(MTO)manufacturing strategies to meet customer needs.At the same time,this production strategy also helps manufacturers effectively reduce inventory cost.In order to improve the competitiveness of enterprises,more and more enterprises regard product quality as their main competitive advantage.Although higher product quality may result in higher costs and management difficulties,quality decisions will affect market demand and profits.Therefore,for participants in the supply chain,quality investment is as important as price decision.Due to the volatility of market demand,retailers as members of the supply chain closer to consumers often face greater risks.The retailer's risk attitude will have a significant impact on the manufacturer and the entire supply chain decision.This article considers the risk aversion behavior of retailers,from whether the manufacturer's cost information is disclosed as an entry point,and analyzes the impact of information asymmetry on supply chain members' decisions,profits and consumer surplus,which has certain theoretical and practical significance.This paper studies the optimal pricing and product quality decisions in the MTO supply chain consisting of risk-neutral manufacturers and risk-averse retailers.Designing wholesale contracts in this supply chain,manufacturing cost information is asymmetric to retailers.Through the stackelberg model,the optimal decision,profit and consumer surplus of supply chain members under complete information and asymmetric information are discussed respectively.After comparing the profits of the manufacturers in the two cases,the conditions for manufacturer information sharing are given.On this basis,we focused on the impact of risk aversion on optimal decision-making,profit and consumer surplus,and the impact of quality cost parameters on information sharing conditions.The study draws the following conclusions:(1)In both cases,the increased risk aversion of the retailer will lead to the improvement of product quality,price and consumer surplus,and the optimal decision of the manufacturer will not be affected by cost information sharing.(2)Whether the retailer benefits from risk aversion when the information is asymmetric depends on the size of the risk aversion coefficient,and whether the manufacturer benefits from the retailer's risk aversion depends on the size of the quality cost coefficient.(3)When the degree of quality cost changes is high,it is unfavorable for manufacturers not to share quality cost information,and only when the quality cost coefficient is large,manufacturers will benefit from sharing cost information with retailers.