NEV supply chain coordination and sustainability considering sales effort and risk aversion under the CVaR criterion

In a two-echelon new energy vehicle (NEV) supply chain consisting of a risk-neutral manufacturer and a risk-averse retailer, the coordination and sustainability problem is investigated. The risk-averse retailer, who makes sales effort and undertakes the incurred effort cost, decides the order quantity and sales effort level under the Conditional Value-at-Risk (CVaR) criterion. We derive the optimal centralized decisions of a vertically integrated supply chain where the retailer is owned by the manufacturer. Taking such a centralized case as the benchmark, we prove that the subsidy-sharing-based wholesale price (SS-WP) contract fails to coordinate the NEV supply chain under the decentralized case where the retailer makes decisions independently. Then we design a subsidy-sharing-based sales rebate/penalty (SS-SRP) contract and derive the contract parameters to achieve coordination. We evaluate the coordination efficiency of this contract and find that a well-designed SS-SRP contract can promote the NEV sales and lead to a Pareto-improving win-win situation for both the NEV manufacturer and retailer compared to the non-coordination case. A series of numerical experiments are carried out to compare the effects of significant parameters under the SS-WP and SS-SRP contract and provide additional observations and implications, including an indication of the necessary conditions to sustainably maintain the NEV supply chain.