Optimal Ordering Policy of Competitive Retailers with Different Risk Preferences

摘要

The study investigates the optimal ordering policies of two competitive retailers, one is risk-neutral, another is loss-averse. Because of different scale and credit, Risk-neutral retailers aim for maximum expected profit, while loss-averse retailers targets maximum expected utility. We establish the optimal ordering policies model for the two kinds of retailers whose demand is random and alternative, And proved the existence and uniqueness of the optimal order quantity. Then we carry on the mathematical experimentation with the uniform distribution function, The analysis revealed that when the degree of retailers' lose-averse coefficient increases, their optimal volume of ordering is reducing, while the corresponding risk-neutral competitor's optimal volume of ordering is increasing. But their total volume of ordering is reducing, The scope is becoming slower; when the risk-neutral retailers' wholesale price is falling, their optimal volume of ordering is increasing, while the corresponding the lose-aversion's optimal volume of ordering is just the opposite. But their total volume of ordering is increasing, The growth is becoming slower too.