Quantity Flexible Contracts: Optimal Decisions with Information Updates1
نویسندگان
چکیده
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 is bounded by a given flexibility limit. We discuss the impact of the forecast quality and the level of flexibility on the optimal decisions and managerial insights behind the results. Supported in part by RGC Grants (CUHK4417/99E and NSFC/RGC CUHK10), a Distinguished Young Investigator Grant from the National Natural Sciences Foundation of China, and a grant from the Hundred Talents Program of the Chinese Academy of Sciences. Currently visiting Department of Systems Engineering and Engineering Management, the Chinese University of Hong Kong, Shatin, Hong Kong
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