%0 Journal Article
%T Option contracts in fresh produce supply chain with circulation loss
%A Chong Wang
%A Xu Chen
%J Journal of Industrial Engineering and Management
%D 2013
%I 
%R 10.3926/jiem.667
%X Purpose: The purpose of this paper is to investigate management decisions via option contracts in a two-stage supply chain in which a fresh produce supplier sells to a retailer, considering the circulation loss of the fresh produce. Design/methodology/approach: Authors propose a Stackelberg model to analyze the supply chain members¡¯ decisions in the decentralized supply chain compared with the integrated one under the newsvendor framework. Findings: The results illustrate that there exists a unique optimal option order quantity for the retailer and a unique optimal option order price for the supplier giving certain conditions; furthermore, option contracts cannot coordinate the fresh produce supply chain when the retailer only orders options. Originality/value: Agricultural products especially fresh produce¡¯s characteristics such as circulation loss and high risk are considered. Option contracts and game theory are combined to manage the fresh produce supply chain¡¯s risk. The proposed tool and models are hoped to shed light to the future works in the field of supply chain risk management.
%K fresh produce
%K supply chain
%K option contracts
%K management decisions
%U http://www.jiem.org/index.php/jiem/article/view/667