Auction and contracting mechanisms for channel coordination with consideration of participants' risk attitudes

Cheng Ma, Y. C.E. Lee, Chi Kin Chan, Yan Wei

Research output: Journal article publicationJournal articleAcademic researchpeer-review

2 Citations (Scopus)

Abstract

This paper considers a two-supplier one-retailer coordinated supply chain system with auction and contracting mechanism incorporating participants' risk attitudes. The risk attitude is quantified using the value-at-risk (VaR) measure and the retailer faces a stochastic linear price-dependent demand function. In the supply chain, the suppliers (providing identical products) compete with each other in order to win the ordering contract of the retailer. Several auction and contracting mechanisms are developed and compared. It can be analytically shown that the retail price of the risk-averse system is higher than that of the risk-neutral system, but the order quantity is lower than that of the risk-neutral system.
Original languageEnglish
Pages (from-to)775-801
Number of pages27
JournalJournal of Industrial and Management Optimization
Volume13
Issue number2
DOIs
Publication statusPublished - 1 Apr 2017

Keywords

  • Auction mechanism
  • Contracting mechanism
  • Supply chain coordination
  • Value-at-risk
  • Wholesale price

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Control and Optimization
  • Applied Mathematics

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