Optimal order strategy for channels under different supply risk levels

Zhibing LIU*, Chi ZHOU*, Guoli WANG

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

2 Citations (Scopus)


We consider an order problem for two channels consisting of one common retailer and two competing suppliers that are subject to supply uncertainty. A new concept of supply risk level (SRL) of a channel is proposed to quantitatively characterize the supply risk of the channel due to supply uncertainty. Under different SRLs, we study the order strategies for the two channels in integrated and decentralized supply chains. Regardless of whether the game is integrated or decentralized, we find that the different SRLs give rise to a difference between the belief-degree costs of the two channels that directly influences the optimal order strategy, market supply and profit of each channel. This implies that the decision maker of the supply chain can take different risk attitudes toward the supply uncertainty of the two channels to adjust the potential market supply and profit of each channel because the decision maker generally replaces the SRL with his or her risk preference. Under given SRLs, we find that integration is a better strategy than decentralization. However, the channel profit with a higher belief-degree cost under decentralization is greater than that under integration in some cases. Finally, proper risk preferences for both channels are suggested to strike a balance between supply reliability and supply risk.

Original languageEnglish
Pages (from-to)4811-4833
Number of pages23
JournalJournal of Intelligent and Fuzzy Systems
Issue number3
Early online date2 Mar 2021
Publication statusPublished - 2021
Externally publishedYes

Bibliographical note

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© 2021-IOS Press. All rights reserved.


  • belief-degree cost
  • supply chain competition
  • supply risk level
  • Supply uncertainty

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