Risk analysis in stochastic supply chains. A mean-risk approach. (Q415944)

The book under review gives a comprehensive introduction to mean-risk analysis of supply chains, and it also provides a reader with an excellent overview of recent scientific results in this area. The authors start their book with a discussion of various approaches to the risk-analysis and confine themselves to the mean-risk analysis of supply chains with risk-averse retailers for the rest of the book. First, they introduce the basic inventory control model known as the newsvendor problem and formulate two models under the mean-risk framework for this single period supply chain problem. The two mean-risk models differ in objective functions, where one of them is represented by profit variance and the other is expressed by profit mean semi-deviation. Then they analytically prove the existence of an efficient region for mean risk models and explore the construction of the efficient frontier in the mean-risk domain. The next chapter of the book deals with the mean-risk analysis for the multiperiod inventory problem. The authors perform the mean-risk analysis with the \((R, nQ)\) model, where they take the long-run average profit as a mean and propose the variance of on-hand inventory and the variance of one-period profit as risk. They conclude this study with systematic searching methods to solve the associated problems numerically and use the same approach to find an efficient frontier. The fourth chapter can be considered as the core of the publication. Here, the authors deal with mean-risk analysis of two-echelon supply chain coordination. They consider a supply chain consisting of a single risk-neutral manufacturer and a single risk-averse retailer and study via a mean-risk analysis how target sales rebate contracts can help to coordinate a supply chain in the above-mentioned setting. The issues presented in this chapter can be useful for decision makers to understand the condition under which target sales rebate contracts can coordinate the supply chains. In addition, the result allows the decision makers to decide whether to apply and how to apply the target sales rebate contracts in enhancing the supply chain efficiency. The concluding chapter contains a discussion on future research directions. The authors outline possible expansions of the mean-risk analysis to several areas. These areas comprise e.g. research of the supply chains which work under information asymmetry when retailer's degree of risk-aversion is a piece of information which is unknown to the manufacturer. They suggest also research focused on examination of how the coordination mechanism can be adjusted to a three or a longer supply chain. The book can be considered as a valuable publication suitable for both researchers and practitioners in supply chain management and it can provide senior undergraduate and postgraduate students with good references.