The optimal decision of risk-averse retailer under time-sensitive and price-sensitive demand

Based on demand are both time-sensitive and price-sensitive, we use the mean-variance theory to characterize the retailer's risk bias and study a two-echelon supply chain separately in decentralized decision mode and centralized decision mode. The decision processes in two modes are analyzed and the optimal solutions are found. A numerical analysis is proposed with an application. It is proved that more profit of supply chain can be gained in the mode of centralized decision than that in the mode of decentralized decision. Thus, and effective decision tool and method are provided for supply chain enterprise to compete in both time-sensitive and price-sensitive markets.