Supply Chain Coordination with a Risk-Averse Retailer and the Call Option Contract in the Presence of a Service Requirement

This paper investigates a supply chain consisting of single risk-neutral supplier and risk-averse retailer with the call option contract service requirement, where retailer’s objective is to maximize Conditional Value-at-Risk about profit. The optimal ordering quantity production are derived in presence requirement. Furthermore, by investigating effect level risk aversion on chain, it found that non-increasing requirement increasing aversion, while supplier’s expected profit non-decreasing decreasing aversion. In addition, this demonstrates impact parameters service-constrained finds may be increasing, constant or unit exercise price. Finally, contract, distribution-free coordination condition achieve Pareto improvement under criterion