A fair distribution of expected profit in a supply chain with a risk-averse manufacturer

This paper presents a stochastic MILP model for the fair distribution of profits in a supply chain under ripple effect with risk-neutral primary suppliers and a robust manufacturer. The robustness is understood as the mean-risk fairness that aims at equitably efficient business-as-usual and worst-case performance of the manufacturer. The objective is to equitably optimise conditional profit-at-risk and expected profit of the manufacturer as well as expected profits of all primary suppliers. In addition, the backup suppliers are considered andrecovery supply portfolios optimised for each disruption scenario. To coordinate production across the entire supply chain, a collaborative partnership is applied enforcing the manufacturer's expected service level to be not less than the expected service level of each primary supplier. The findings indicated that if the manufacturer aims at equitably efficient maximisation of average and worst-case profit under collaborative partnership, the associated expected profits of all primary suppliers may also converge to their respective collaborative maxima, and the more reliable is supply chain environment, the closer to their maxima are the supplier's profits. The findings also demonstrated that the fair distribution of supply chain profits under collaborative partnership simultaneously enforces coordinated production of parts by primary suppliers and products by the manufacturer.¡abstract¿Please edit the abstract down to no more than 200 words.