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

    Research output: Contribution to journalArticle

    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

    Fingerprint

    Risk Aversion
    Inventory Model
    Alternatives
    Conditional Value at Risk
    Risk Measures
    Mathematical Programming
    Profit
    Mathematical programming
    Maximise
    Uncertainty
    Profitability
    Standards
    Inventory model
    Risk aversion
    Model
    Risk measures
    Product quality
    Conditional value at risk
    Consumer demand
    Product standards

    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

    Cite this

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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.",
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    journal = "Journal of Japan Industrial Management Association",
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