Option Contract for a Retailer-Led Supply Chain with Uncertain Demand and Selling Price

Fuyou Huang and Zhe Gao ()
Additional contact information
Fuyou Huang: Institute of Transportation Development Strategy & Planning of Sichuan Province
Zhe Gao: Institute of Transportation Development Strategy & Planning of Sichuan Province

A chapter in Proceedings of the 2024 5th International Conference on Management Science and Engineering Management (ICMSEM 2024), 2024, pp 347-353 from Springer

Abstract: Abstract This paper considers a two-echelon (supplier & retailer) supply chain under random market needs, where the retailer has the predominance in the supply chain, and the selling price is completely hinge on market demand. We employ an option contract to coordinate the supply chain, and discuss the impact of the demand sensitivity on the optimal order/assembly quantity and contact parameters for the purpose of improving supply chain performance. The conclusion of this paper is the supply chain can be coordinated through option contract, and the option premium is inversely correlated with the exercise price under supply chain coordiantion. Given the option price is constant under supply chain coordination, the strike price increases with the demand sensitivity.

Keywords: Option contract; supply chain coordination; stochastic demand; uncertain selling price (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-570-6_36

Ordering information: This item can be ordered from
http://www.springer.com/9789464635706

DOI: 10.2991/978-94-6463-570-6_36

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().