Analysis of Two-Echelon Supply Chains with Risk-Bias Participators

This paper studies how the risk attitude of the members affects decisions, profits and channel coordination. We propose a Value-at-Risk formulation to capture the risk bias of each supply chain member. Demand distribution and retailerpsilas specified value alpha determine whether the risk constraint is loose or binding. Under binding risk constraint the retailerpsilas optimal order is independent of his target profit K and less than the one under risk neutral. With a slightly-risk-averse retailer, risk-neutral manufacturer can coordinate the supply chain with traditional contracts (e.g. revenue-sharing contract or buy-back contract) by adjusting the retailer´s share of the system profit lambda so that it is no less than a threshold value. The higher the risk-averse degree is, the larger the threshold value is. But manufacturer canpsilat coordinate the channel with a risk-prone or severely-risk-averse retailer by the traditional contracts.