Risk analysis of supply contract with call options for buyers

Wang, Qunzhi; Bong-Sung, Chu; Wang, Jian; Kumakiri, Yuki

doi:10.1016/j.ijpe.2011.01.013

Cited by 30 publications

(12 citation statements)

References 14 publications

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“…Zhang et al (2010) proposed a supply chain contract with bidirectional option and buy back policy for perishable product. Wang et al (2011) demonstrated the risks associated from introducing supply chain contract with call option. Two important parameters, risk indicator and probability of such risk, were proposed in this paper.…”

Section: Literature Reviewmentioning

confidence: 99%

Supply Chain Contract with Put and Call Option: The Case of Non-Linear Option Premium Price

Saithong¹,

Luong²

2013

Industrial Engineering and Management Systems

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This research investigates the supply chain contract between a distributor and a supplier in which the selling period is relatively short in comparison with long production lead time. At the first stage, supplier who is a Stackelberg leader offers the distributor a contract with a set of parameters, and subjected to those parameters, the distributor placesthe number ofinitial orders as well as options. In order to purchase the option, the distributor pays non-linear option premium price with respect to the number of purchased options. At the second stage, based on realized demand, the distributor has the right to exercise option as either put or call which is limited up to the number of purchased options. The wholesale price contract is used as a benchmarking contract. This research has confirmed that the supply chain contract with a non-linear option premium price can help to coordinate the supply chain.

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Section: Literature Reviewmentioning

confidence: 99%

Supply Chain Contract with Put and Call Option: The Case of Non-Linear Option Premium Price

Saithong¹,

Luong²

2013

Industrial Engineering and Management Systems

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“…As a result, the benefit of the whole supply chain and the retailer may increase when an option contract is offered by at least one supplier. Wang et al (2012) also investigated the supply contract's risk with call option in a newsvendor model by deriving two important parameters. The first parameter is a risk indicator for risk existence in using supply contract with call option, and the other is a ratio for measuring the probability of risk occurrence.…”

Section: Literature Reviewmentioning

confidence: 99%

Development of a Composite Revenue Sharing-Quantity Flexibility Contract

Lumsakul¹,

Luong²

2013

Industrial Engineering and Management Systems

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In supply chain management, the supply contract can induce collaboration and coordination among the supply chain members in order to optimize supply chain performance. Numerous supply contracts have been examined; however, some difficulties related to the application of these contracts still occur. One of the solutions is to apply the composite supply contract which can assist in the supply chain coordination. This research examines the composite contract of the revenue sharing and quantity flexibility contracts in a two-stage supply chain, which comprises a retailer and a supplier. In this research, a mathematical model of the composite contract is developed; then, the applicability of the proposed composite contract is examined by investigating its capability in terms of supply chain coordination and profit allocation. In the numerical experiments, the composite revenue sharing-quantity flexibility contract showed that it is superior to both component contracts in terms of supply chain coordination and profit allocation among supply chain members.

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“…Wang and Tsao constructed asupply chain contract model based on the bidirectional option contract from retailer's perspective, and analyzed the impact of different parameters on the retailer's decision-making behavior [13]. Wang, Chu and Wang anayzed the risk of introducing options based on the traditional newsboy model, and derived two important parameters for buyer to estimate the risks of introducing options [14].…”

Section: Introductionmentioning

confidence: 99%

“…Literature [10][11][12][13][14] adopted the ordering form with combination of wholesale price and option, it decreased the trading flexibility and reduced the supplier's production risk, such that it could make the supply chain as a whole better able to respond to the uncertainty, literature [12][13][14] also didn't discuss that the supply chain members how to achieve a win-win situation.…”

Section: Introductionmentioning

confidence: 99%

On the Coordination of Supply Chain with Demand Uncertainty Under the Combination of the Wholesale Price Contract and Option Contract

Liu

Jiangtao

Tang

2016

Proceedings of the 22nd International Conference on Industrial Engineering and Engineering Management 2015

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In this paper, we studied the coordination of the supply chain consisting of one retailer and one supplier, where the market demand is uncertain. The combination of the Wholesale Price Contract and Option Contract is used to solve the problem that market risk is borne independently by the supplier. The theoretical analysis shows that the strategy can share the risk between members of the supply chain, i.e., the supplier's risk reduced, and the supply chain system profit can be rationally distributed, the supply chain can be coordinated and a win-win situation can be achieved by choosing appropriate option price. Finally, the numerical examples were given to verify this conclusion.

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Risk analysis of supply contract with call options for buyers

Cited by 30 publications

References 14 publications

Supply Chain Contract with Put and Call Option: The Case of Non-Linear Option Premium Price

Supply Chain Contract with Put and Call Option: The Case of Non-Linear Option Premium Price

Development of a Composite Revenue Sharing-Quantity Flexibility Contract

On the Coordination of Supply Chain with Demand Uncertainty Under the Combination of the Wholesale Price Contract and Option Contract

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