A risk-averse newsvendor model under marketing-dependency and price-dependency

Dai, Jian S.; Meng, Weidong

doi:10.1016/j.ijpe.2014.11.006

Cited by 54 publications

(29 citation statements)

References 32 publications

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“…With respect to marketing effort, we refer interested readers to Taylor (), Liu et al. (), Sayadi and Makui (), Dai and Meng (), and Pal et al. ().…”

Section: Introductionmentioning

confidence: 99%

Coordination in a retailer‐dominated supply chain with a risk‐averse manufacturer under marketing dependency

Huang

Qian

2018

Int Trans Operational Res

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In this paper, a combined contract composed of option and cost sharing is proposed to investigate coordination and risk‐sharing issues of the supply chain consisting of a dominant retailer and a risk‐averse manufacturer. Demand faced by the retailer is stochastic in nature and dependent on marketing effort. We adopt the conditional value‐at‐risk (CVaR) criterion to model risk aversion of the manufacturer, and derive the optimal strategy for each member with a Stackelberg game in which the retailer acts as the leader. It is verified that the combined contract can coordinate the supply chain and achieve Pareto‐improvement. Moreover, the dominant retailer can allocate the system‐wide profit arbitrarily only by option price in the premise of coordination. It is worth mentioning that coordination of the supply chain is reachable only when the manufacturer is low in risk aversion, and the manufacturer's risk aversion is a significant element for contract design and profit allocation.

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“…With respect to marketing effort, we refer interested readers to Taylor (), Liu et al. (), Sayadi and Makui (), Dai and Meng (), and Pal et al. ().…”

Section: Introductionmentioning

confidence: 99%

Coordination in a retailer‐dominated supply chain with a risk‐averse manufacturer under marketing dependency

Huang

Qian

2018

Int Trans Operational Res

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“…They found that riskaversion could mitigate overstocking due to competition. Dai and Meng (2015) analyzed joint ordering decision under market and price dependency. They showed that optimal order quantity increases with the marketing effort, the optimal price remains unchanged.…”

Section: Risk Aversionmentioning

confidence: 99%

A Review of Behavioral Decision Making in the Newsvendor Problem

Sharma

Nandi

2018

OSCM: An Int. Journal

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Schweitzer and Cachon (2000) demonstrated that choices of decision-maker in the newsvendor problem setting systematically deviate from those that maximize their expected profit. Since then, a large body of empirical and theoretical studies has been published to describe the newsvendor decisionmaking behavior. To establish further, the purpose of this paper is twofold. First, it identifies the various behavioral theories and biases that explain the newsvendor behavior by employing a systematic literature review of peer-reviewed articles published in leading journals from 2000 to 2017. Second, it classifies and analyzes the identified literature from three dimensions of human behavior namely: individual decision making biases, social preferences, and cultural aspects. Our findings from the review show that research has primarily emphasized individual decision making biases while social and cultural aspects lack analysis and are worthy of investigation. Finally, we discuss some directions for future research, followed by the conclusion and limitations of this review.

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“…Alternatively, VaR allows the decision maker to assign a confidence level, expecting to attain a certain level of return. Specifically, the newer CVaR, defined as the weighted average of VaR and losses strictly exceeding VaR, has been widely adopted in the financial management and Supply Chain Management (SCM) literature . For instance, Wu et al study expected profit maximization vs 2 risk approaches (ie, VaR and CVaR for the standard newsvendor problem).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Specifically, the newer CVaR, defined as the weighted average of VaR and losses strictly exceeding VaR, has been widely adopted in the financial management and Supply Chain Management (SCM) literature. [6][7][8][9] For instance, Wu et al 8 study expected profit maximization vs 2 risk approaches (ie, VaR and CVaR for the standard newsvendor problem). They suggest that a higher degree of risk aversion makes the newsvendor order fewer goods, and this effect is stronger for the CVaR criterion as it does not consider the expected profit at all.…”

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confidence: 99%

Effects of risk aversion and decision preference on equilibriums in supply chain finance incorporating bank credit with credit guarantee

Yan

Liu

et al. 2017

Appl Stoch Models Bus & Ind

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We constructed a Stackelberg game in a supply chain finance (SCF) system including a manufacturer, a capital‐constrained retailer, and a bank that provides loans on the basis of the manufacturer's credit guarantee. To emphasize the financial service providers' risks, we assumed that both the bank and the manufacturer are risk‐averse and formulated trade‐off objective functions for both of them as the convex combination of the expected profit and conditional value‐at‐risk. To explore the effects of the risk preferences and decision preferences on SCF equilibriums, we mathematically analyzed the optimal order quantities, wholesale prices, and interest rates under different risk preference scenarios and performed numerical analyses to quantify the effects. We found that incorporating bank credit with a credit guarantee can effectively balance the retailer's financing risk between the bank and the manufacturer through interest rate charging and wholesale pricing. Moreover, SCF equilibriums with risk aversion are highly affected by the degree of both the lender's and guarantor's risk tolerance in regard to the borrower's default probability and will be more conservative than those in the risk‐neutral cases that only maximize expected profit.

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A risk-averse newsvendor model under marketing-dependency and price-dependency

Cited by 54 publications

References 32 publications

Coordination in a retailer‐dominated supply chain with a risk‐averse manufacturer under marketing dependency

Coordination in a retailer‐dominated supply chain with a risk‐averse manufacturer under marketing dependency

A Review of Behavioral Decision Making in the Newsvendor Problem

Effects of risk aversion and decision preference on equilibriums in supply chain finance incorporating bank credit with credit guarantee

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