Pricing strategy and coordination in a dual channel supply chain with a risk averse retailer
This paper considers a dual channel supply chain consisting of a risk neutral supplier and a risk averse retailer, in which the market demand is uncertain and the supplier opens an e channel, thus directly participating in the market. At the beginning of the sales season, the supplier and the retailer construct their initial stocks, and they follow a consistent pricing strategy. Under the Value at Risk (VaR) criterion and the Conditional Value at Risk (CVaR) criterion, we formulate the problem as a Stackelberg game model and obtain the equilibrium solutions in the decentralized and centralized situations. Based on the advantage of the CVaR measure, we further explore the effects of the retailer's risk indicator on the retail price, the ordering quantities of the two channels and the profits of the two members, and the total profits of the supply chain. Further, an improved risk sharing contract is presented to coordinate the dual channel supply chain and ensures that both supply chain members achieve a win win outcome. In addition, we make an extension to the case of the inconsistent prices in the two channels, and we also verify that the dual channel supply chain can be coordinated by the similar improved risk sharing contract.