Coordinate the Supply Chain with Risk-Averse Agents under CVaR Criteria

Following the coordination framework created by Gan, Sethi and Yan[1], we address the supply chain coordination issues with a supplier and a retailer where their risk measure is Conditional Value-at- Risk (CVaR). We find the set of pareto-optimal solutions, and design contracts to achieve these solutions. When the supplier´s profit is deterministic, we find that the wholesale price contract can coordinate the supply chain and when the supplier and the retailer have the same risk attitudes, we find that the revenue-sharing contract and the buy-back contract can coordinate the supply chain.