Impacts of put option contract and supply chain structure in a multi-period supply chain with uncertain demand

This paper builds the multi-period optimization models that incorporate put option contract and two supply chain structures to determine production decision for a supplier ordering manufacturer in two-stage chain. applies method of dynamic programming derive optimal policies provides an approximate algorithm evaluate myopic policies. also conducts numerical examples illustrate impacts contract, structure demand risk on members’ decisions total profits as well channel’s profit. The results indicate can motivate increase service level reduce manufacturer’s inventory under structures, when compared case without contract. In manufacturer-led structure, channel always benefits from with high price low exercise price, while price. supplier-led benefit With is more profitable than are structure. Without members will first decrease then risk. Finally, this identifies explicit conditions which be coordinated via structures. coordinating better off