Flexible and risk-sharing supply contracts under price uncertainty

Chung Lun Li; Panos Kouvelis

doi:10.1287/mnsc.45.10.1378

Flexible and risk-sharing supply contracts under price uncertainty

Chung Lun Li, Panos Kouvelis

Research output: Journal article publication › Journal article › Academic research › peer-review

183 Citations (Scopus)

Abstract

This study examines supply contracts for deterministic demand but in an environment of uncertain prices. Valuation methodologies are developed for different types of supply contracts. Optimal purchasing strategies for both time-flexible and time-inflexible contracts with risk-sharing features are discussed. The discussion illustrates how time flexibility, quantity flexibility, supplier selection, and risk sharing, when carefully exercised can effectively reduce the sourcing cost in environments of price uncertainty.

Original language	English
Pages (from-to)	1378-1398
Number of pages	21
Journal	Management Science
Volume	45
Issue number	10
DOIs	https://doi.org/10.1287/mnsc.45.10.1378
Publication status	Published - 1 Jan 1999
Externally published	Yes

ASJC Scopus subject areas

Strategy and Management
Management Science and Operations Research

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10.1287/mnsc.45.10.1378

Cite this

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Flexible and risk-sharing supply contracts under price uncertainty

Abstract

ASJC Scopus subject areas

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