Options Procurement Policy for Option Contracts with Supply and Spot Market Uncertainty
Joint Authors
Ma, Lijun
Xue, Weili
Xu, Xiaolin
Source
Discrete Dynamics in Nature and Society
Issue
Vol. 2014, Issue 2014 (31 Dec. 2014), pp.1-7, 7 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2014-07-01
Country of Publication
Egypt
No. of Pages
7
Main Subjects
Abstract EN
Supplier’s reliability is a major issue in procurement management.
In this paper, we establish a decision making model from the perspective of the firm who will procure from the multiple suppliers and the spot markets.
The suppliers are unreliable and provide different types of option-type supply contracts which should be made before demand realization, while the spot market can only be used after demand realization and has both the price and liquidity risks.
We establish the optimal portfolio policies for the firm with conditions to find the qualified suppliers.
By defining a new function which contains the demand risk, the supplier’s risk, and the liquidity risk, we find that the optimal policy is to allocate different curves of this function to different suppliers.
We also study some special cases to derive some managerial insights.
At last, we numerically study how the various risks affect the choice of suppliers and the value of the option contract.
American Psychological Association (APA)
Xue, Weili& Xu, Xiaolin& Ma, Lijun. 2014. Options Procurement Policy for Option Contracts with Supply and Spot Market Uncertainty. Discrete Dynamics in Nature and Society،Vol. 2014, no. 2014, pp.1-7.
https://search.emarefa.net/detail/BIM-507039
Modern Language Association (MLA)
Xue, Weili…[et al.]. Options Procurement Policy for Option Contracts with Supply and Spot Market Uncertainty. Discrete Dynamics in Nature and Society No. 2014 (2014), pp.1-7.
https://search.emarefa.net/detail/BIM-507039
American Medical Association (AMA)
Xue, Weili& Xu, Xiaolin& Ma, Lijun. Options Procurement Policy for Option Contracts with Supply and Spot Market Uncertainty. Discrete Dynamics in Nature and Society. 2014. Vol. 2014, no. 2014, pp.1-7.
https://search.emarefa.net/detail/BIM-507039
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-507039