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Push, Pull, and Supply Chain Risk‐Averse Attitude

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  • Lei Yang
  • Gangshu (George) Cai
  • Jian Chen

Abstract

The literature has shown that supply chain performance is affected by the allocation of inventory risk. Traditionally, a pull supply chain generates a higher optimal order quantity and hence higher supply chain profit than a push supply chain when firms are risk neutral. Extended from the classic push and pull newsvendor models, this study investigates the impact of firms’ risk‐averse attitudes on supply chain performance. Based on firms’ conditional value‐at‐risk (CVaR), our analysis indicates that push can lead to a higher optimal order quantity than pull when the supplier is sufficiently more risk averse than the retailer. Meanwhile, pull contracts cannot always survive push challenge like in risk‐neutral supply chains. We demonstrate that three‐part tariff revenue sharing and buy‐back contracts can coordinate both the push and the pull supply chains to achieve the Pareto optimality maximizing combined supply chain CVaR.

Suggested Citation

  • Lei Yang & Gangshu (George) Cai & Jian Chen, 2018. "Push, Pull, and Supply Chain Risk‐Averse Attitude," Production and Operations Management, Production and Operations Management Society, vol. 27(8), pages 1534-1552, August.
    • Handle: RePEc:bla:popmgt:v:27:y:2018:i:8:p:1534-1552
    DOI: 10.1111/poms.12881
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    Cited by:

    1. Tang, Ruihong & Yang, Lei, 2020. "Impacts of financing mechanism and power structure on supply chains under cap-and-trade regulation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 139(C).
    2. Li, Jianbin & Cheng, Wei & Song, Xiangrong & Zheng, Yuting, 2023. "The value of buyer financing with a minimum quantity commitment in pull supply chains," Omega, Elsevier, vol. 121(C).
    3. Song, Zhuzhu & Tang, Wansheng & Zhao, Ruiqing & Zhang, Guoqing, 2021. "Inventory strategy of the risk averse supplier and overconfident manufacturer with uncertain demand," International Journal of Production Economics, Elsevier, vol. 234(C).
    4. Sarkar, P. & Wahab, M.I.M. & Fang, L., 2023. "Weather rebate contracts for different risk attitudes of supply chain members," European Journal of Operational Research, Elsevier, vol. 311(1), pages 139-153.
    5. Bo Yan & Yanping Liu & Zijie Jin, 2023. "Joint coordination contract for capital‐constrained supply chains under asymmetric information," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 251-270, January.
    6. Guo, Shu & Choi, Tsan-Ming & Chung, Sai-Ho, 2022. "Self-design fun: Should 3D printing be employed in mass customization operations?," European Journal of Operational Research, Elsevier, vol. 299(3), pages 883-897.
    7. Goudarzi, Fatemeh (Sahar) & Olaru, Doina & Bergey, Paul, 2023. "Beyond risk attitude: Unpacking behavioral drivers of supply chain contracts," International Journal of Production Economics, Elsevier, vol. 255(C).
    8. Juzhi Zhang & Suresh P. Sethi & Tsan‐Ming Choi & T.C.E. Cheng, 2022. "Pareto optimality and contract dependence in supply chain coordination with risk‐averse agents," Production and Operations Management, Production and Operations Management Society, vol. 31(6), pages 2557-2570, June.
    9. Jammernegg, Werner & Kischka, Peter & Silbermayr, Lena, 2024. "Risk preferences, newsvendor orders and supply chain coordination using the Mean-CVaR model," International Journal of Production Economics, Elsevier, vol. 270(C).
    10. Hoogstra-Klein, Marjanke A. & Meijboom, Kars, 2021. "A qualitative exploration of the wood product supply chain – investigating the possibilities and desirability of an increased demand orientation," Forest Policy and Economics, Elsevier, vol. 133(C).
    11. Lin, Zhiping & Shi, Ruixia & Stecke, Kathryn E. & Xiao, Wenli & Xu, Di, 2021. "Selling to a financially constrained E-commerce retailer with bankruptcy cost and tax," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    12. Liu, Zhongyi & Hua, Shengya & Zhai, Xin, 2020. "Supply chain coordination with risk-averse retailer and option contract: Supplier-led vs. Retailer-led," International Journal of Production Economics, Elsevier, vol. 223(C).
    13. Sarkar, P. & Wahab, M.I.M. & Fang, L., 2024. "Weather rebate sharing contract for enhancing supply chain performance," International Journal of Production Economics, Elsevier, vol. 272(C).
    14. Choi, Tsan-Ming & Guo, Shu, 2020. "Is a ‘free lunch’ a good lunch? The performance of zero wholesale price-based supply-chain contracts," European Journal of Operational Research, Elsevier, vol. 285(1), pages 237-246.
    15. Hao, Zhongyuan & Li, Juan & Cai, Jinling, 2023. "Allocation of inventory responsibilities in overconfident supply chains," European Journal of Operational Research, Elsevier, vol. 305(1), pages 207-221.
    16. Xiangfeng Chen & Qihui Lu & Gangshu (George) Cai, 2020. "Buyer Financing in Pull Supply Chains: Zero‐Interest Early Payment or In‐House Factoring?," Production and Operations Management, Production and Operations Management Society, vol. 29(10), pages 2307-2325, October.
    17. Chen, Jianxin & Hou, Rui & Zhang, Tonghua & Zhou, Yongwu, 2024. "Newsvendor model for a dyadic supply chain with push-pull strategy under shareholding and risk aversion," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 221(C), pages 645-662.
    18. Jia, Fu & Zhang, Shiyuan & Zheng, Xiao-Xue & Choi, Tsan-Ming, 2023. "A novel coordination mechanism to coordinate the multi-agent reverse supply chain with fairness concerns," International Journal of Production Economics, Elsevier, vol. 265(C).
    19. Bo Li & Antonio Arreola‐Risa, 2022. "Minimizing conditional value‐at‐risk under a modified basestock policy," Production and Operations Management, Production and Operations Management Society, vol. 31(4), pages 1822-1838, April.
    20. Wang, Daao & Dimitrov, Stanko & Jian, Lirong, 2020. "Optimal inventory decisions for a risk-averse retailer when offering layaway," European Journal of Operational Research, Elsevier, vol. 284(1), pages 108-120.
    21. Chen, Yuting & Zhang, Rong & Liu, Bin, 2022. "New product financing decision: Crowdfunding, bank or supply chain?," International Journal of Production Economics, Elsevier, vol. 249(C).
    22. Jing Liu & Fuyou Huang & Chao Ma, 2021. "Coordination of VMI supply chain with replenishment tactic under risk aversion and sales effort," 4OR, Springer, vol. 19(3), pages 389-414, September.

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