Agricultural Product Supply Chain Based On Option Contract With Demand Influenced By Effort

In China, the agricultural products supply chain is not only connected to the upstream agricultural producers but also linked to the terminal consumers. Research in agricultural products supply chain is not a simple economic problem, but it is related to the construction and development of agriculture and society’s long-term stability. The option contract can effectively restrain the uncertainty of supply and demand due to farmers planting blindly, promoting the stable development of agricultural product market, and reducing “sell hard while buy expensively” phenomenon. At the same time, effort is vital for the improvement of supply chain profit, so we introduce effort level as well when we use option contract to respond effectively to the market volatility. Besides, when study the agricultural products supply chain, we consider the multiple suppliers and a retailer, referring to the actual situation of the big supermarket chains in China, which has important guiding significance to the reality.In this paper, on the basis of summarizing the existing agricultural products supply chain literature, analyzing the deficiency of the existing research, combined with the option contract and effort level, we study the influence of the two elements on the supply chain and the interaction between them; comparing and analyzing supply chain of agricultural products under one-way option contract with bidirectional option contract respectively; Finally, according to the market reality, expanding the research on the agricultural products supply chain under option contract based on multiple vendors. Conclusion can be drawn as follow:First of all, in a two-stage agricultural products supply chain consist of a supplier and a retailer, the option contract can create a win-win situation for suppliers and retailers under certain conditions, and achieve supply chain coordination. When the option price rises, suppliers’ expect profit drops, while retailers’ expect profit rises. Secondly, in the agricultural product supply chain, compare one-way option contract with bidirectional one, when the supply chain achieves coordination, the effect on retailer and supplier’s profit is the same, but the retailer’s initial ordering strategy and option price is different. In addition, similar to the one-way option contract, the retailer’s effort level is not higher than that of the centralized situation under bidirectional one, so the effort level should be consistent with the centralizedsupply chain, so that coordination can be achieved. Finally, in multiple suppliers and one retailer in the supply chain of agricultural products, retailer chooses a certain number of suppliers for the initial order. At the same time, the retailer can make full use of the supplier’s production capacity by setting options parameters in order to realize the profit maximization. Retailers can use profit sharing contract to ensure the suppliers accept option contract. The allocation proportion is positively related to unit exercise price, while negatively related to option price..