A Research on Supply Chain Coordination Model Based on Options Trading under Random Demand

Abstract

Abstract: As a supply chain contract, option contracts can make a supply chain coordinated. Based on retailer ordering mode, by introducing the transaction of the call options and comparing the retailers optimal order quantity and options with that of the whole supply chain, it is found that, the profit obtained when the supply chain achieves optimal ordering is always greater than that obtained when retailers achieve optimal ordering. Finally, it concludes that, by adjusting the parameters of contract option, the supplier can make the retailer initiatively adjust the optimal order quantity to the order quantity level that is achieved when the supply chain is coordinated.

Key words: options trading, supply chain coordination, random demand

Deng Shao-ling. A Research on Supply Chain Coordination Model Based on Options Trading under Random Demand[J]. Industrial Engineering Journal , 2014, 17(3): 51-55.

References

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