An Emergency Quantity Discount Contract with Supplier Risk Aversion under the Asymmetric Information of Sales Costs

Abstract

In the circumstance that unexpected events lead to the information asymmetry of sales costs, supplier risk aversion and stochastic price, this paper discusses the internal law of using an emergency quantity discount contract to coordinate the supply chain. First, the Conditional Value at Risk (CVaR) model of supplier risk aversion under the condition of information symmetry is constructed. In addition, the model is extended to the game model of the CVaR of supplier risk aversion under the condition of the asymmetric information of sales costs and solved. After that, the simulation test is performed. The results show that, firstly, under the condition of random price, the supplier risk aversion leads to the phenomenon of bifurcation and mutation in each decision variable of the supply chain system. Secondly, retailers can obtain excess profits by concealing private information, but this harms the interests of suppliers and the entire supply chain. Thirdly, suppliers with different risk attitudes should have different strategies concerning asymmetry in sales cost information. Fourthly, the more asymmetric the information for the sales costs, the more unstable the system. The conclusion is that the phenomenon of bifurcation mutation is the result of the coupling effect of price randomness and supplier risk aversion. The supply chain cannot coordinate in the bifurcation mutation region, but can coordinate outside of it. Hiding private information benefits those who own it, but harms the system as a whole.

Keywords

• stochastic price
• risk aversion
• asymmetric information
• bifurcation phenomena
• emergency quantity discount contract