Value at Risk Management in Multi-period Supply Inventory Coordination

Inventory coordination problem of multi supplies and its risks management are rarely studied in the past. Here a multi-period supply inventory coordination operation between suppliers and manufacturers and a risk management strategy are presented. All inventory coordination risks are divided into holding risk and shortage risk and analyzed on the basis of value at risk (VaR). Then a risk-control model is established to lessen the risks including both holding risk and shortage risk and gain better supply coordination. Finally, a car supply inventory problem is simulated to illustrate the proposed model.