scholarly journals Procurement Strategies Using Portfolio Approach Based on Options and Spot Markets Procurement

2017 ◽  
Vol 12 (10) ◽  
pp. 212
Author(s):  
Wang Heng ◽  
Xu Qi

The paper explored the conditions for retailers to implement option contract and the strategies to make joint purchase in spot market. Under the condition of uncertain market demands, a joint purchase model integrating batch ordering, option contract and spot market has been developed. Considering price fluctuation, the conditions for implementing option contract-based ordering have been studied; the impacts of price fluctuation and option execution price on retailers optimal ordering of joint purchase have been analyzed as well. The result shows that if a retailer adopts a joint purchase strategy, certain constraints need to be met. Otherwise, it is more conductive for the retailer to maximize revenues by adopting a single purchase order. When the spot market is involved, the total order quantity and the order quantity of option contract are negatively correlated with the option execution price and are positively correlated with the spot price fluctuation; and, the order quantity of bulk order contract is positively correlated with the option execution price and is negatively correlated with the spot price fluctuation.

2020 ◽  
Vol 2020 ◽  
pp. 1-11
Author(s):  
Xinru Hou ◽  
Xinsheng Xu ◽  
Haibin Chen

This paper considers the procurement mechanism with two supply channels, namely, an option contract purchase and a spot market. For the mechanism, under the stochastic demand and the stochastic spot price, we consider the portfolio procurement with the spot trading liquidity and the option speculation respectively. To maximize the buyer’s profit, we establish two optimal portfolio procurement strategy models for those two scenarios. Based on the buyer’s cost-benefit analysis, we present a solution method to each model and provide an optimal ordering policy to the buyer. By the obtained results, we analyze the role of the spot trading liquidity and option speculation in a buyer’s expected profit. Some numerical experiments are presented to show the validity of the formulated models.


2012 ◽  
Vol 29 (06) ◽  
pp. 1250037 ◽  
Author(s):  
KIMITOSHI SATO ◽  
KATSUSHIGE SAWAKI

In this paper, we consider an inventory model in which a firm uses the spot market for procurement in order to accomplish the minimization of total discounted costs. The model can be formulated as impulse control problem where the demand and spot price follow diffusion stochastic processes. We explore sufficient conditions under which an optimal policy exists. Furthermore, we derive an optimal policy as an (s, S) policy where s and S are uniquely determined as a solution of simultaneous equation. Finally, we show some analytical properties of the optimal policy. Some numerical examples are also presented.


2019 ◽  
Vol 2019 ◽  
pp. 1-12
Author(s):  
Jiarong Luo ◽  
Xiaolin Zhang ◽  
Xianglan Jiang

Uncertainties in product demand, component yield, and spot price are keys to many industrial settings and they are usually explicitly incorporated. This paper develops an analytical framework to value option contracts in hedging the risks in a supply chain consisting of a component supplier with random yield and a manufacturer facing stochastic demand for end products. The manufacturer can obtain the components from the supplier through firm order contracts and option contracts. Apart from the contract market, there is a spot market in which both the manufacturer and the supplier can buy or sell the components. Analytical expressions for the optimal ordering and production policies are derived. Our study shows that the manufacturer and the supplier can effectively deal with the risks they involve by adopting option contracts. However, we find that the supply chain cannot be coordinated by the traditional option contract. To coordinate such system, we propose a protocol to be combined with the option contract. Finally, the explicit condition for coordination under the proposed contracts is identified.


2016 ◽  
Vol 2016 ◽  
pp. 1-11 ◽  
Author(s):  
Rui Wang ◽  
Shiji Song ◽  
Cheng Wu

This paper studies an option contract for coordinating a supply chain comprising one risk-neutral supplier and two risk-averse retailers engaged in promotion competition in the selling season. For a given option contract, in decentralized case, each risk-averse retailer decides the optimal order quantity and the promotion policy by maximizing the conditional value-at-risk of profit. Based on the retailers’ decision, the supplier derives the optimal production policy by maximizing expected profit. In centralized case, the optimal decision of the supply chain system is obtained. Based on the decentralized and centralized decision, we find the coordination conditions of the supply chain system, which can optimize the supply chain system profit and make the profits of the supply chain members achieve Pareto optimum. As for the subchain, we also find the coordination conditions, which generalize the results of the supply chain with one supplier and one retailer. Our analysis and numerical experiments show that there exists a unique Nash equilibrium between two retailers, and the optimal order quantity of each retailer increases (decreases) with its own (competitor’s) promotion level.


2016 ◽  
Vol 26 (2) ◽  
pp. 219-240
Author(s):  
Wen Lin ◽  
Horng Chang

In this article, we study inventory models to determine the optimal special order and maximum saving cost of imperfective items when the supplier offers a temporary discount. The received items are not all perfect and the defectives can be screened out by the end of 100% screening process. Three models are considered according to the special order occurs at regular replenishment time, non-regular replenishment time, and screening time of economic order quantity cycle. Each model has two sub-cases to be discussed. In temporary discount problems, in general, there are integer operators in objective functions. We suggest theorems to find the closed-form solutions to these kinds of problems. Furthermore, numerical examples and sensitivity analysis are given to illustrate the results of the proposed properties and theorems.


FLORESTA ◽  
2010 ◽  
Vol 40 (2) ◽  
Author(s):  
Marilene Bronoski ◽  
Dimas Agostinho da Silva ◽  
Roberto Rochadelli

Considerando o equilíbrio entre os custos de manutenção de estoques e o de preparação de pedidos de compra, este artigo se propôs a apontar o lote econômico de aquisição do item madeira, matéria-prima da indústria de compensados, e o comparar com as quantidades atualmente praticadas em dez indústrias desse segmento. Para efeito comparativo, estratificou-se a amostra em dois grupos, considerando-se a agregação ou não de valor ao produto final. Concluiu-se que a maioria dessas empresas já pratica quantidades próximas ao lote econômico de compra cujas médias entre as quantidades reais e as calculadas são idênticas. Observou-se, também, igualdade entre as médias dos custos totais de estoque nas duas situações. Embora individualmente a variação entre as quantidades seja de até 110%, a máxima variação entre os custos totais é de apenas 9%, confirmando uma das críticas a essa técnica, ou seja, que modificações no tamanho do lote somente devam ser propostas para diferenças superiores a 50%. O número mensal de pedidos entre o praticado pela amostra e o sugerido pelo LEC difere em 7%. Observou-se que ambos os grupos mantêm comportamentos semelhantes quanto às variações entre a quantidade sugerida pelo LEC e a praticada. Três empresas da amostra, por apresentarem altos custos totais de estoques, são candidatas a rever o tamanho do lote, tendendo à quantidade econômica. Palavras-chave: Logística; lote econômico de compra; custos de estoque; indústria de compensados.   Abstract Economic lot of purchase in the plywood industry of the Metropolitan Region of Curitiba. Considering the balance between the costs of maintenance of supplies and of preparation of purchase order, this article points the economic lot of purchase of the item wooden blade, raw material of the industry of plywood and to compare with the amounts currently practiced in ten industries of this segment. For comparative effect, the sample was divided in two groups, considering the aggregation or not of value in the final item. The conclusion is that the majority of these companies already practices amounts close to the economic lot quantity witch averages between the real amounts and the calculated ones are identical. It was also observed, equality among averages of the total costs of supply in the two situations. Although individually the variation among the amounts is 110%, the maximum variation between the total costs is of only 9%, confirming one of critics to this technique, the modifications in the batch size only must be proposals for differences superior to 50%. The monthly number of order between the practiced for the sample and the suggested for the EOQ differs in 7%. It was observed that both the groups keep similar behaviors in relation of the variations between the amount suggested for the EOQ and the practiced. In function of rising of total costs of supplies, three companies of sample are candidates to review these amounts, tending to the economic order quantity.Keyword: Logistic; economical order quantity; costs of supply; industry of plywood.


Author(s):  
R. P. Tripathi ◽  
S. S. Misra

In most of the classical inventory models the demand is considered as constant. In this paper the model has been framed to study the items whose demand and deterioration both are constant. The authors developed a model to determine an optimal order quantity by using calculus technique of maxima and minima. Thus, it helps a retailer to decide its optimal ordering quantity under the constraints of constant deterioration rate and constant pattern of demand.


2013 ◽  
Vol 694-697 ◽  
pp. 3428-3433
Author(s):  
Fei Hu

An inventory model was developed to determine an ordering policy for the retailer under conditions of allowable shortage and two levels of delay permitted. We present a simple algebraic method to replace the use of differential calculus for determining the retailer's optimal ordering policy. A theorem is presented to obtain the optimal order quantity, and numerical examples are given to illustrate the results obtained in this paper.


2019 ◽  
Vol 15 (1) ◽  
pp. 1-15 ◽  
Author(s):  
Anis Erma Wulandari ◽  
Harianto Harianto ◽  
Bustanul Arifin ◽  
Heny K Suwarsinah

Indonesia is the world 4th largest coffee producer after Brazil, Vietnam and Colombia with export potential and higher national consumption concluded in 2017 while the coffee production was relatively stagnant. This was led the producer to not only the production risk but also the price risk which then emphasize the importance of futures markets existence as price risk management. This study is performed to examine the impact of futures price volatility to spot market using ARCH-GARCH toward primary data of coffee futures and spot prices of 1172 trading days starting from January 2014 to June 2018. The ARCH-GARCH analysis result indicates that futures price volatility and monetary variables are impacting the volatility of spot price. Arabica spot price volatility is impacted by volatility of Arabica futures price, inflation and exchange rate while Robusta spot price is impacted by Robusta futures price volatility and exchange rate. This is confirming that futures market plays dominant role in spot price discovery. Local futures and spot prices are also found to be significantly influenced by volatility of offshore futures prices which indicates that emerging country futures market is actually influenced by offshore futures market which the price itself used as price reference.


2018 ◽  
Vol 13 (02) ◽  
Author(s):  
Melinda Miranda Wijaya ◽  
David P. E. Saerang ◽  
Meily Y. B. Kalalo

            The cost of raw material inventory is a sacrifice of economic resources, measured in units of money, which have occurred or are likely to occur for raw material inventory, consisting of purchase costs, storage costs, and inventory shortage. This study aims to determine (1) Total Inventory Cost (TIC) based on RM policy. Kinamang Fuel Fish and Economic Order Quantity (EOQ) method during 2017 (2) Frequency of ordering of efficient fish raw material during 2017 (3) Quantity of safety stock and when to reorder point of raw materials fish in RM. Ikan Bakar Kinamang during 2017. This research is a descriptive research with qualitative approach. And use case study method. The result of the research shows that the Cost of Fish Raw Material Supplies at Kinamang Fuel Fish Restaurant is still not economical because the purchase (order) is only based on the previous sales estimate, and does not take into account economically the expenses incurred for the purchase and storage of fish raw materials the. Precisely with the calculation of Economic Order Quantity (EOQ), the cost of raw materials inventory of fish is much less, and can determine properly and correctly about the safety stock (safety stock), and reorder (reorder point).Keywords: Inventory Cost, EOQ, Frequency, Safety Stock, ROP


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