Impacts of retailer’s risk averse behaviors on quick response fashion supply chain systems

Tsan Ming Choi

Research output: Journal article publicationJournal articleAcademic researchpeer-review

24 Citations (Scopus)

Abstract

In order to cope with demand volatility, the quick response system which aims to shorten replenishment lead time has been well-established. With a shortened lead time, retailers can postpone the ordering decision and improve their demand forecast by gathering updated market information. However, there is a limit for quick response in which the market demand forecast is never fully accurate and uncertainty can never be fully eliminated. Thus, to keep the level of risk under control, retailers tend to possess a risk-averse behaviour in making their respective inventory decisions. In this paper, we explore the make-to-order quick response fashion supply chain with a risk averse retailer. We employ the mean-risk framework to incorporate the retailer’s risk averse behavior into the optimization model. With the focal point on uncovering the impacts brought by the retailer’s risk averse behavior to the quick response fashion supply chain system, we analytically derive important theoretical insights regarding the retailer’s optimal decisions, the implied inventory service levels, the values of quick response, and the contractual arrangements to attain Pareto improvement when the retailer is risk averse.
Original languageEnglish
Pages (from-to)1-19
Number of pages19
JournalAnnals of Operations Research
DOIs
Publication statusAccepted/In press - 27 Jun 2016

Keywords

  • Efficient consumer response
  • Fashion industry
  • Quick response
  • Risk averse behavior
  • Supply chain management

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Management Science and Operations Research

Cite this