Risk-aversion approach for inventory model considering a competitive store and an alternative product

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    Abstract

    This paper considers a risk-aversion approach for an inventory model considering standard and high qualities of a product under a competitive store. In the case the competitive store sells a standard product, another store must decide the purchase volumes, prices and ordering quantities of standard and high quality products in order to manage a loss risk as well as maximize the total profit. In this paper, a mathematical programming problem of the proposed model is proposed considering these conditions and uncertainty of consumer demand based on risk measure such as conditional Value-at-Risk. Furthermore, in order to obtain the optimal prices and ordering quantities, a scenariobased approach is developed.

    Original languageEnglish
    Pages (from-to)124-134
    Number of pages11
    JournalJournal of Japan Industrial Management Association
    Volume67
    Issue number2E
    Publication statusPublished - 2016

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    Keywords

    • Conditional Value-at-Risk
    • Mathematical programming
    • Risk management
    • Scenariobased approach

    ASJC Scopus subject areas

    • Strategy and Management
    • Management Science and Operations Research
    • Industrial and Manufacturing Engineering
    • Applied Mathematics

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