Portfolio Model Seasonal Goods Purchase Contracts Based On Options Contracts

In the competition of the supply chain, purchasing management has been far moreimportant than sales and inventory management, and becoming the core of the supplychain competition. On the one hand, in a mature market, leading and graspingcustomer needs, providing customer with goods timely and accurate, have become thekey to win the competitive advantages in the market; On the other hand, the control ofprocurement cost and the monitor of procurement risk have the overall significance ofthe supply chain. Strengthening the control of procurement and decentralizingprocurement risk can not only control the rate of shortage, reduce the opportunitylosses and stable relationship between supply and demand, but also can reduceprocurement costs and improve profit margins.Options contracts appear to change the contractual relationship based solely ontraditional contracts between enterprises of the supply chain, and convert to therelationship between the contract and the spot market. It will increase the flexibilityand convenience of supply chain decisions, at the same time decrease the risk ofsupply chain procurement management. Options contracts do not exist alone in theprocurement management, and they are often together with traditional contracts (suchas long-term contracts, repurchase contracts, etc.), spot market transactions to achievethe combination of procurement contracts. And it can ensure the stability of theprocurement activities, as well as give full play to the flexibility of the optionscontracts to reduce procurement risk. In the case of buyers facing with a variety ofoptions contracts, how to choose effective options contracts, and for the conduct ofthe portfolio of contracts is particularly important. In this regard, the paper elaboratesthe way of screening valid contracts and selecting the portfolio of contracts in Chapterthree.This paper focuses on the procurement of seasonal goods combined with theadvantages of options contracts, procurement contracts portfolio. The combination ofseasonal merchandise procurement contract model is constructed based on optionscontracts, and the combination model of procurement contracts is subdivided underthe guidance of the theory of supply chain initiative. The subdivision is divided intotwo kinds of procurement contracts: the dominant mode of suppliers and the dominantmode of retailers. By applying the quantitative model analysis, the paper considers theoptimal procurement strategy for the buyers, and achieves the numerical simulationand parameter sensitivity analysis through Matlab, and the visual analysis of the impact of the various parameters of the optimal decision of the buyer is given then.Studies have shown that the existence of the option contracts will significantlyimprove and optimize the structure of procurement contracts for buyers, as well asprovide a new way of thinking and try of procurement management.