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

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.


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


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