A CVaR-based method for material purchasing revision

Purchasing plays an important role in the logistics management. Since the price of materials fluctuates constantly, to revise the formulated material purchasing strategy timely is a necessary procedure to reduce the operating cost. This paper proposes a method to find the revising purchasing quantity of the original strategy in the price fluctuating situation. This method combines with the idea of the financial risk measurement technique of CVaR under the assumption that the decision maker is the type of risk aversion. This paper proves the effectiveness of the method and verifies it with an application case.