Abstract: Supply chain is a complicated system which can be formulated as a network consisting of manufacturer tier, retailer tier and demand market tire. Based on the Prospect Theory, the decision makers prefer risk-averse when facing the uncertain revenue, and the retailers are usually confronted with uncertain demand and profits. To describe the dynamic characteristic of the supply chain network, the decision making time is discreted into multi-period planning horizons. The decision-making environments of various players in a planning period are stable, while may be changing in different planning periods. The manufacturers make various types of products, and the risk-averse retailers deal with a corresponding consumer market with stochastic demand. Prospect theory is adopted to describe the loss-averse behaviors of retailers, and the transferring inventory is used to express the relationship between adjacent periods. The optimal decision behaviors of manufacturers, retailers and demand markets are modeled by variational inequalities, Lagrange duality theory and complementary theory, and then the governing supply chain network equilibrium is obtained. In turn, the solving method with modified projection contraction algorithm is designed. Using numerical examples, the characteristic of two breakeven points of retailers is obtained and the impact of the loss-averse coefficients in different periods on the optimal strategies of various players is analyzed. The results show that when the loss-averse coefficients of retailers increase, the first breakeven points of the retailers decrease and the second breakeven points increase; the order quantity of the retailers decrease, and their expected profits and expected utilities increase. On the contrary, it will be harmful to the manufacturers and consumers; when the stock-out cost increase, the retailers have to order more products to avoid stock-out losses, but meanwhile increase the possibilities of surplus; when the loss-averse coefficients change in a certain period, the retailers and manufacturers should adjust their strategies in the whole planning horizons accordingly.The supply chain risk management theory will be enriched and references for dynamic supply chain modeling are suggested in this study.

Key words: supply chain, network equilibrium, loss averse, muli periods