Title: Analysing consumer RP in a dual-channel supply chain with a risk-averse retailer

Authors: Yushan Jiang; Bo Li; Dongping Song

Addresses: College of Management and Economics, Tianjin University, Tianjin, 300072, China ' College of Management and Economics, Tianjin University, Tianjin, 300072, China ' School of Management, Liverpool University, Liverpool L69 3BX, UK

Abstract: This paper investigates a dual-channel supply chain consisting of a risk-neutral manufacturer and a risk-averse retailer. The manufacturer offers a consumer RP in the online channel, in which consumers face valuation uncertainty. We use conditional value-at-risk (CVaR) criterion to evaluate the risk-averse behaviour of the retailer. We examine how consumer RP and risk-averse behaviour influence the equilibrium solutions and supply chain agents' performance. It is shown that the manufacturer's optimal RP is related to consumer types. If the consumer has a moderate valuation of the product, the optimal RP depending on the retailer's risk-averse level. We observe a counter-intuitive phenomenon; the retailer's expected utility may increase under the double pressure of manufacturer encroachment and better returns service. Furthermore, a buyback revenue-sharing contract is offered to coordinate the dual-channel supply chain when the refund is endogenous. Finally, we explore several extensions. [Received 25 July 2015; Revised 27 October 2016; Accepted 13 November 2016]

Keywords: supply chain management; dual-channel supply chain; manufacturer encroachment; demand uncertainty; valuation uncertainty; consumer returns; risk averse; conditional value-at-risk; CVaR; game theory; Stackelberg.

DOI: 10.1504/EJIE.2017.084877

European Journal of Industrial Engineering, 2017 Vol.11 No.3, pp.271 - 302

Available online: 27 Jun 2017 *

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