Optimal pricing in mass customization supply chains with risk-averse agents and retail competition

Choi, Tsan‐Ming; Ma, Cheng; Shen, Bin; Sun, Qing

doi:10.1016/j.omega.2018.08.004

Cited by 124 publications

(69 citation statements)

References 32 publications

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“…ere are also some literatures on the risk attitude of retailers or suppliers and manufacturers or risk aversion management of the whole supply chain. Choi et al [23] analyzed the optimal pricing decisions in a mass customization supply chain with one risk-averse manufacturer and two risk-averse competing retailers and focused on exploring how the degree of risk aversion of each supply chain agent affects the optimal prices as well as consumer welfare, supply chain profitability, and credit deposit under a competitive setting. Wang and He [24] compared the supply chain performances of the case under risk neutrality and risk aversion and investigated the impact of risk aversion of the supplier and the manufacturers and the low-carbon supply chain performances, respectively.…”

Section: E Impact Of Risk Aversion Characteristicsmentioning

confidence: 99%

Pricing and Carbon Emission Reduction Decisions in a Supply Chain with a Risk-Averse Retailer under Carbon Tax Regulation

Yan-gang

Shen

2020

Mathematical Problems in Engineering

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Carbon tax is an emission regulation, which widely used to curb the carbon emissions generated from firms. In the context of carbon tax policy, firms need to determine an optimal carbon reduction level and optimal product prices. To address firms’ decision-making challenges, this paper considers a two-echelon supply chain consisting of a single manufacturer and a single retailer under carbon tax policy; it establishes a Stackelberg game model with a risk-averse retailer and a risk-neutral manufacturer who is the leader of the game. The paper studies the influence of the government’s carbon tax policy and retailer’s risk-averse attitude on the optimal decision of the supply chain. The result shows that when the retailer is risk aversion, the degree of risk aversion of the retailer is positively correlated with the wholesale price of the manufacturer and unit carbon emission reduction, and within a certain range of carbon emission reduction cost coefficient, it is positively correlated with the price of products; with the increase of the carbon tax rate imposed by the government, the retail price of unit products, the wholesale price of the manufacturer, and the carbon emission reduction of unit products also increase. Finally, the results are verified by numerical examples.

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Section: E Impact Of Risk Aversion Characteristicsmentioning

confidence: 99%

Pricing and Carbon Emission Reduction Decisions in a Supply Chain with a Risk-Averse Retailer under Carbon Tax Regulation

Yan-gang

Shen

2020

Mathematical Problems in Engineering

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“…Chen et al [26] used a principal agent model to study the risk aversion problem in dual channels, and discussed the impact of critical parameters on the retailer's optimal contract and profit. Choi et al [27] used game theory to explore the pricing problem where manufacturers and retailers are all risk averse and they explored the impact of demand correlation on profitability. Bai and Meng [28] established the MV framework to explore the operational decision-making of members under two different SC structures and found that low-scale risk aversion is beneficial to players.…”

Section: Risk Aversion Behavior In the Supply Chainmentioning

confidence: 99%

Optimal Decisions for Two Risk-Averse Competitive Manufacturers under the Cap-and-Trade Policy and Uncertain Demand

Sun

Yang

Zhong

2020

IJERPH

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With the increasingly serious problem of environmental pollution, reducing carbon emissions has become an urgent task for all countries. The cap-and-trade (C&T) policy has gained international recognition and has been adopted by several countries. In this paper, considering the uncertainty of market demand, we discuss the carbon emission reduction and price policies of two risk-averse competitive manufacturers under the C&T policy. The two manufacturers have two competitive behaviors: simultaneous decision making and sequential decision making. Two models were constructed for these behaviors. The optimal decisions, carbon emission reduction rate, and price were obtained from these two models. Furthermore, in this paper the effects of some key parameters on the optimal decision are discussed, and some managerial insights are obtained. The results show that the lower the manufacturers’ risk aversion level is, the higher their carbon emission reduction rate and utilities. As the carbon quota increases, the manufacturers’ optimal carbon reduction rate and utilities increase. Considering consumers’ environmental awareness, it is more beneficial for the government to reduce the carbon quota and motivate manufacturers’ internal enthusiasm for emission reduction. The government can, through macro control of the market, make carbon trading prices increase appropriately and encourage manufacturers to reduce carbon emissions.

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“…Choi et al. () study the optimal pricing in MC supply chains considering the risk attitudes of the agents and retail competition in the market. However, research on finance strategies for MC program is limited, and still presented scarce improvement in the past decade.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Recently, Choi et al. () study the optimal pricing in MC supply chains with risk‐averse agents and retail competition; however, in this paper, we will consider the SCF issue.…”

Section: Literature Reviewmentioning

confidence: 99%

Influences of supply chain finance on the mass customization program: risk attitudes and cash flow shortage

Guo

Liu

2019

Int Trans Operational Res

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In recent years, to satisfy diversified customer needs in the target market, an increasing number of brands have launched mass customization (MC) programs as one of their core operations strategies. The production process flexibility and personalization degree of customized products (i.e., the MC products) have thus become key to the success of MC schemes. In the meantime, however, considering the high market uncertainty in consumer preferences and the challenges from the production process, there are plenty of risks in MC operations. Hence, in this paper we develop a game-theoretic model consisting of an MC brand and an upstream manufacturer to identify the influences of supply chain finance (SCF) on MC programs. The influences brought by the risk attitudes of both MC brand and manufacturer are analyzed. Besides, an extra interest rate for raising the working capital for production (e.g., from the bank) at the manufacturing level is also considered in this paper to address the impact of cash flow shortage. We find that when the positive sensitivity of the market demand with respect to the modularity level of the MC product is sufficiently high, the optimal product modularity level of the MC product increases with the MC brand's degree of risk averse. In addition, it can also be observed that when both the market demand's positive sensitivity to the modularity level of the MC product and the MC brand's opportunity cost rate for placing the advance order are sufficiently high, any increase in the risk-averse degree of the MC brand or the manufacturer will lower the manufacturer's optimal wholesale price of the MC product as well as the MC brand's optimal rate of the advance order. Furthermore, the higher the interest that the manufacturer needs to pay (such as to the bank) for raising the working capital for the MC production process, the lower the optimal wholesale price of each finished MC product will be to help the manufacturer raise more money through the advance order placed by the MC brand. These observations complete the findings in the extant literature and provide important managerial insights into managing MC operations.

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Optimal pricing in mass customization supply chains with risk-averse agents and retail competition

Cited by 124 publications

References 32 publications

Pricing and Carbon Emission Reduction Decisions in a Supply Chain with a Risk-Averse Retailer under Carbon Tax Regulation

Pricing and Carbon Emission Reduction Decisions in a Supply Chain with a Risk-Averse Retailer under Carbon Tax Regulation

Optimal Decisions for Two Risk-Averse Competitive Manufacturers under the Cap-and-Trade Policy and Uncertain Demand

Influences of supply chain finance on the mass customization program: risk attitudes and cash flow shortage

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