Agriculture Supply Chain Coordination Research Based On Option

In recent years, with the rapid development of China’s agriculture economy, agriculture supply chain has been a hot research issue during the scholars, and the most important issue of agriculture is coordination. The agricultural products supply chain is composed by different economic entities, they all make decision according to their own maximum profit. However, every economic entity’s goal always conflict with the agriculture supply chain system, so it leads to double marginalization. In order to optimize decisions of agriculture supply chain, each member of the agricultural supply chain not only optimize its own goal but also must consider the influence of its decision-making to other members and the whole of the agricultural supply chain, then achieve the overall optimized goal. So we need to set up a contract to coordinate the agriculture supply chain.Supply chain option contract is a new direction researched by domestic and overseas scholars about supply chain contracts. Option contract can not only coordinate the supply chain through setting relevant contract parameters, but also lower the supply chain risks at a certain degree. This paper tries to introduce the option contract to agricultural supply chain on the basis of previous research on industry products. We set up agriculture supply chain option contract coordination model according to the characteristics of agriculture products.In this paper, we consider the agriculture supply chain composed by company, cooperative organization and farmer. Firstly we set up every decision model of agriculture supply chain under contract market. Then we get the optimal order strategy with the goal of maximizing agriculture supply chain profit, and give the option contract parameter should meet the conditions established by the cooperative organization under optimal conditions. And then we discuss agricultural supply chain coordination and optimization problem under the both market and stock market, and it improve the cooperative organization and the company’s decision model compared to only under option contract market. Under this condition we also get company’s the optimal ordering strategy and the option contract parameters’equation should meet. In addition, we find that cooperatives organization need to consider the influence caused by spot market price and the probability of selling the surplus agriculture products after we consider both contract market and spot market. Finally use an example to prove the model, and do the sensitivity analysis about the spot market price.