Author(s):
Jianwu Sun

Author Affiliation:
Department of Mathematics, Binzhou University, Binzhou, China

This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Based on the CVaR measure, this paper introduces a Cooperation and Competition model for the risk management of the two-stage supply chain. It is supposed that both the supplier and the retailer are risk-averse and their objectives are to minimize their own CVaR (Conditional Value-at-Risk) objective instead of the expected profit. We introduce an optimal equilibrium solution to this model, which implies the supplier and the retailer should give up a same value no more than for their cooperation. It is proved that the optimal equilibrium solution can be obtained by solving a corresponding mathematical programming problem. Numerical results show that this method is efficient to improve the risk management of the two-stage supply chain.

KEYWORDS:
Conditional value-at-risk; equilibrium solution; supply chain management; risk management