Advances in Production Engineering & Management
Volume 18 | Number 1 | March 2023 | pp 104–115
https://doi.org/10.14743/apem2023.1.460
Supply chain game analysis based on mean-variance and price risk aversion under different power structures
Wang, Y.L.; Yang, L.; Chen, J.H.; Li, P.
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A B S T R A C T
In view of the random retail price and retailer’s preference for retail price risk aversion, we used mean-variance to describe the uncertainty risk of retail price. To study the impacts of both the retail price uncertainty risk and retail price risk aversion preference on supply chain (SC) decision-making, we constructed a SC game model based on three different power structures, including Manufacturer Stackelberg (MS) game, Retailer Stackelberg (RS) game, and Vertical Nash (VN) game. The results showed that the retail price uncertainty risk and the retailer’s retail price risk aversion preference weakened the manufacturer’s production effort input, decreased the retailer’s enthusiasm for ordering, and damaged the interests of manufacturer and retailer. Under the three different power structures, the production effort input of the manufacturer depended on the production effort affecting wholesale price efficiency and retail price efficiency. The retailer’s expected utility was largest under the MS game model and smallest under the VN game model. The manufacturer’s profits were closely related to each parameter under the three respective power structures. This study provides theoretical guidance for the decision-making of SC enterprises with retail price risk and retailer with retail price risk aversion preference under different power structure situations.
A R T I C L E I N F O
Keywords • Supply chain game; Mean-variance; Retail price risk aversion; Different power structures; Game theory; Vertical Nash game; Retailer Stackelberg game; Manufacturer Stackelberg game
Corresponding author • Li, P.
Article history • Received 13 February 2023, Revised 8 April 2023, Accepted 17 April 2023
Published on-line • 29 April 2022
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