Research on supply chain price-only contract based on mean-CVaR model

The wholesale price contract and the dual purchase contract are the most common contracts in supply chain because they are price-only contracts. The traditional researches always neglect the risk aversion of decision maker in these supply chain. In order to consider the risk aversion in the supply chain, the CVaR model of loss in revenue of retailer in the two styles contracts under a two-level supply chain is proposed in this paper according to the definition of CVaR which always used in financial engineering. Consequently, the mean-CVaR models of the two kinds of contracts which aimed at the revenue maximization with the CVaR risk explosion constrains is proposed. The numerical results indicate that the dual purchase contract achieves strict Pareto improvement over the wholesale price contract with more revenue and less risk explosion.