Effects of Supply Reliability, Risk Aversion, and Wealth on Retailer’s Optimal Order Strategy

Table 1

Notation.

Notation	Definition
	Quantity of products that the retailer should order for the selling stage
	Optimal order quantity
	Market demand, a random variable with a density function and distribution function
	Supply reliability factor, a random variable with a density function and distribution function
	Purchase cost per unit of product for the retailer
	Market sales price per unit of product at the selling stage
	A higher cost to obtain additional order quantity if demand exceeds the original order
	Salvage price per unit of product unsold at the end of the selling stage
	Initial wealth of retailer
	Ultimate wealth of retailer
	A utility function; for the risk-averse retailer with , is the risk aversion degree and for the risk-neutral retailer with linear utility ,