Flexible and risk-sharing supply contracts under price uncertainty

Chung Lun Li, Panos Kouvelis

Research output: Journal article publicationJournal articleAcademic researchpeer-review

176 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 languageEnglish
Pages (from-to)1378-1398
Number of pages21
JournalManagement Science
Volume45
Issue number10
DOIs
Publication statusPublished - 1 Jan 1999
Externally publishedYes

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research

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