Research on ordering and pricing decision of risk-averse manufacturer under exchange rate uncertainty

Based on the global supply chain, which includes two suppliers (a foreign supplier and a local supplier) and one manufacturer (which is risk averse), and considering the exchange rate risk, this paper studies the optimal decision problem of manufacturer's ordering and pricing. Through constructing the optimal decision model, the optimal decision strategy was given. The results show that a higher exchange rate risk or a higher risk-averse degree will decrease the optimal order quantity from the foreign supplier; and a higher exchange rate risk, or a higher risk-averse degree will increase the optimal order quantity from the local supplier. The manufacturer's expected profit increases in the risk-averse degree and the exchange rate risk.