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Mean-Risk Analysis of Wholesale Price Contracts with Stochastic Price-Dependent Demand

In: Contract Analysis and Design for Supply Chains with Stochastic Demand

Author

Listed:
  • Yingxue Zhao

    (University of International Business and Economics)

  • Xiaoge Meng

    (Beijing University of Aeronautics and Astronautics)

  • Shouyang Wang

    (Academy of Mathematics and Systems Science)

  • T. C. Edwin Cheng

    (The Hong Kong Polytechnic University)

Abstract

Given that risk is a pertinent issue in designing supply chain contracts with stochastic demand, Chap. 3 is devoted to developing a mean-risk analysis for the commonly adopted wholesale price contract. The research incorporates contract value risk into the wholesale price contract model. Regarding the contract value risk, it actually relates to the uncertainty in the true value of the contract and arises from various uncertainty sources inherent in the supply chain, such as demand uncertainty, price uncertainty, etc. In addition, given that the supply chain agents with different risk preferences will have different risk attitudes towards the contract value risk, which in turn affects their contracting decisions, the research also considers the degree of supply chain agents risk-aversion towards the contract value risk. This chapter makes the first attempt to assess the efficiency of wholesale price contracts, incorporating contract value risk and risk preferences attached to it; thereby some interesting managerial and academic insights are generated for supply chain contracts.

Suggested Citation

  • Yingxue Zhao & Xiaoge Meng & Shouyang Wang & T. C. Edwin Cheng, 2016. "Mean-Risk Analysis of Wholesale Price Contracts with Stochastic Price-Dependent Demand," International Series in Operations Research & Management Science, in: Contract Analysis and Design for Supply Chains with Stochastic Demand, edition 1, chapter 0, pages 61-89, Springer.
    • Handle: RePEc:spr:isochp:978-1-4899-7633-8_3
    DOI: 10.1007/978-1-4899-7633-8_3
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