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

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

doi:10.3934/jimo.2016046

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 publication › Journal article › Academic research › peer-review

4 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 language	English
Pages (from-to)	775-801
Number of pages	27
Journal	Journal of Industrial and Management Optimization
Volume	13
Issue number	2
DOIs	https://doi.org/10.3934/jimo.2016046
Publication status	Published - 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

More information

10.3934/jimo.2016046

Cite this

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AB - 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.

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KW - Value-at-risk

KW - Wholesale price

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

Abstract

Keywords

ASJC Scopus subject areas

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