Coordination of Supply Chain of a Three-level Fresh Products Based on Conditional Value at Risk

Abstract

This paper considers a fresh products supply chain consisting of a supplier, distributor and a retailer. we use CVaR risk measurement tool to build the supply chain model of three-level of fresh products which the retailer under the risk aversion, preference, respectively. At the same time, the loss of fresh products with time is considered and the option contract is applied to the supply chain model. Therefore, the supply chain coordination is realized by adjusting the option contract parameters. The conclusion implies that the purchase price of the option is not affected by the loss value but the execution price of the option is affected by the loss value. In addition, the attitude of aversion and preference about the retailer will not affect the execution price of the option and only affect the purchase price of the option of the distributor and retailer.