Quantity Flexibility Contracts: Optimal Decisions with Information Updates*

Quantity Flexibility Contracts: Optimal Decisions with Information Updates

Quantity Flexible Contracts: Optimal Decisions with Information Updates1

We study single and multi-period quantity flexible contracts involving one demand forecast update in each period and a spot market. We obtain the optimal order quantity at the beginning of a period and order quantities on contract and from the spot market at the then prevailing price after the forecast revision and before the demand materialization. The amount that can be purchased on contract ...

Optimal Contracts with Costly Information Acquisition

This paper analyzes a dynamic moral-hazard model where a principal searches for an opportunity of uncertain return, and hires an agent to evaluate potential options that arrive stochastically over time. The agent’s effort affects the informativeness of a signal about an option’s return. Based on the information provided by the agent, the principal decides whether or not to exercise an option at...

Modeling and Assessing the Quantity Flexibility Contracts for Seasonal Products with High Demand Volatility

A noticeable and practicable scheme of channel coordination is the quantity flexibility contracts. It can be emphasized that quantity flexibility contracts can share the risk and cost of market demand uncertainty and yield more potential profitability for members within a supply chain. In view of its increasing importance, quantity flexibility contracts have been studied extensively and various...

Let Managers Decide: Designing Contracts for Optimal Investment Decisions

Real options literature commonly assumes that, either the investment opportunity is directly managed by the owners, or the managers are perfectly aligned with them. However, agency conflicts occur and managers reveal interests not totally in line with those of the shareholders. This may have a major impact on the value maximizing decisions, namely, on the optimal timing to invest. This paper co...