Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/30512
Title: Mean-variance analysis of a single supplier and retailer supply chain under a returns policy
Authors: Choi, TM 
Li, D
Yan, H
Keywords: Mean-variance analysis
Returns policy
Supply chain management
Issue Date: 2008
Publisher: Elsevier
Source: European journal of operational research, 2008, v. 184, no. 1, p. 356-376 How to cite?
Journal: European journal of operational research 
Abstract: In the literature, most of the supply chain coordinating policies target at improving the supply chain's efficiency in terms of expected cost reduction or expected profit improvement. However, optimizing the expected performance alone cannot guarantee that the realized performance measure will fall within a small neighborhood of its expected value when the corresponding variance is high. Moreover, it ignores the risk aversion of supply chain members which may affect the achievability of channel coordination. As a result, we carry out in this paper a mean-variance (MV) analysis of supply chains under a returns policy. We first propose an MV formulation for a single supplier single retailer supply chain with a newsvendor type of product. The objective of each supply chain decision maker is to maximize the expected profit such that the standard deviation of profit is under the decision maker's control. We study both the cases with centralized and decentralized supply chains. We illustrate how a returns policy can be applied for managing the supply chains to address the issues such as channel coordination and risk control. Extensive numerical studies are conducted and managerial findings are proposed.
URI: http://hdl.handle.net/10397/30512
ISSN: 0377-2217
EISSN: 1872-6860
DOI: 10.1016/j.ejor.2006.10.051
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