A study on the coordination mode for closed-loop supply chain with risk preference

Abstract

The coordination of closed-loop supply chain with risk preference in stochastic demand is studied. Both the market demand is price sensitive and the stochastic demand which possibly exists in reality are considered, and the profit function is no longer being taken as a decision-making but the utility function with the risk preferences of manufacturers and retailers is used in calculating. The retailer take recycling model is analyzed to construct a Stackelberg game model for closed-loop supply chain where the manufacturers play the role of leader while the retailers play the role of followers. The Stackelberg equilibrium game is proposed on a basis of decentralized decision which is discussed in relation to centralized decision. The possibility of the existence of a coordinative strategy is also discussed for the closed-loop supply chain. Finally a simulation computing is completed to verify that the method of modeling is available.