Purchasing Strategy for Loss-aversion Manufacturer Based on Option Market

DOI

10.2991/febm-18.2018.23How to use a DOI?

Keywords

Purchasing strategy; Option market; Loss-aversion; Option purchase; Execution proportion

Abstract

This paper studies the operation of purchase strategy for supply chain of loss-aversion manufacturer under the option market. The study shows that loss-aversion manufacturer does not behave positively in the option purchase, and the option order quantity decreases as the loss-aversion coefficient increases; the option execution proportion increases as the aversion coefficient of manufacturer increases. Through the comparative analysis of expected profit of system supply chain with option order adopted for both loss-aversion manufacturer and risk neutral manufacturer, it is found that the expected profit of system supply chain increases first and decreases later on as the loss-aversion coefficient of manufacturer increases, which is yet always larger than the expected profit of system supply chain for option purchase of risk neutral manufacturer. Finally, depending on numerical analysis, this paper validates the effectiveness of the conclusion.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Wenyi Du
AU  - Xiaojing Liu
AU  - Yubing Fu
PY  - 2018/12
DA  - 2018/12
TI  - Purchasing Strategy for Loss-aversion Manufacturer Based on Option Market
BT  - Proceedings of the Third International Conference on Economic and Business Management (FEBM 2018)
PB  - Atlantis Press
SP  - 99
EP  - 103
SN  - 2352-5428
UR  - https://doi.org/10.2991/febm-18.2018.23
DO  - 10.2991/febm-18.2018.23
ID  - Du2018/12
ER  -