Abstract:

It is commonly understood that the demand for apparel varies with the market. This character which affects the decision-making of the supply chain participants is analyzed. Having different competitive power, price negotiating ability, information channels and organizations, retailers’ risk preference also varies with product life cycles. This paper introduced the concept of fashion index and established a factor-based risk avoiding model. Through analyzing the expected utility function in both centralized and distributed modes, the optimal buy-back strategy is figured. Simulation of actual examples verified that in different fashion cycles retailers’ risk avoiding factor increases with the decrease of fashion index. In order to achieve the perfect coordination of the supply chain, suppliers’ buy-back price should also increase accordingly to encourage retailers. This study indicates that considering the fashion index will better display the market expectation of the members in different periods of the fashion cycle, thus obtaining optimal coordination parameters and maximizing the profits of the supply chain.