Purchasing strategy of electric energy metering devices: A CVaR-based study

In this paper, we study the purchasing strategy problem when the suppliers' reliability is uncertain. This problem is derived from the real world situation in the power metering device industry. Besides the price and product category each supplier can provide, the purchasing strategy is also influenced by other intangible impacts, i.e. wild fluctuations of suppliers' reliability and lead time can highly damage the supply performance. An efficient supply of power metering devices is vital to the national economy and livelihood and is guaranteed at all cost in the current situation. In this paper, we use the conditional value-at-risk (CVaR), which is developed in the finance theory, to evaluate the performance of power meter device supply chain. The objective of our model is to maximize the tangible value added to the purchasing portfolio. Finally, empirical study and extensive experiments are also provided.