Analyzing Risks Measurement and Transmission of Supply Chain with Retail Price Fluctuation

Abstract

In order to measure the supply chain risk caused by the fluctuation of retail price which is considered as a random variable, in this paper, for a three-echelon supply chain with no inventories, we use the variances of profits of supplier, distributor and retailer to characterize their risks. And then we analyze the transmission mode of risks by the differences of variances of profits of retailer, distributor and supplier, finding the ranges of the distribution price and wholesale price that ensure the risks of distributor are lower than that of retailer, and the risks of supplier are lower than that of distributor. At last, a numerical example is presented to show the results.