Manufacturer’s return policy in a two-stage supply chain with two risk-averse retailers and random demand. (English) Zbl 1205.90048

Hsieh, Chung-Chi; Lu, Yu-Ting

Eur. J. Oper. Res. 207, No. 1, 514-523 (2010).

Summary: This paper studies the manufacturer’s return policy and the retailers’ decisions in a supply chain consisting of one manufacturer and two risk-averse retailers under a single-period setting with price-sensitive random demand. We characterize each retailer’s risk-embedded objective via conditional value-at-risk, and construct manufacturer-Stackelberg games with and without horizontal price competition between the retailers. We explore, through numerical studies, the effects of the retailers’ aversion to risk and other parameters on the manufacturer’s return policy and profit and the retailers’ decisions. We further investigate the effect of distribution asymmetry by comparing the results with normal and lognormal demand.

MSC:

90B06	Transportation, logistics and supply chain management
91B30	Risk theory, insurance (MSC2010)
91A65	Hierarchical games (including Stackelberg games)
91B42	Consumer behavior, demand theory

Keywords:

conditional value-at-risk; demand uncertainty; Newsvendor model; return policy; risk management

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