We investigate the effect of sequential commitment in the decentralized newsvendor model with price-dependent demand. Sequential commitment allows the self-profit maximizing parties to commit to contract parameters (e.g., wholesale price, retail price, buyback price and order quantity) sequentially and alternately, and we investigate its effect on the equilibrium profits of the channel and its ...

Purpose: Our paper is to analyze optimal purchasing strategies when a manufacturer can buy raw materials from a long-term contract supplier and a spot market under spot price uncertainty. Design/methodology/approach: The procurement model is solved by using dynamic programming. First, we maximize the DM’s utility of the second period, obtaining the optimal contract quantity and spot quantity fo...

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...

This paper proposes a double-sided flexibility in adjusting the lease price as an alternative, more accessible tool for managing revenues or controlling costs in volatile markets. The double-sided flexibility addresses the dilemma of allowing only one party of a lease contract to have the price adjustment flexibility while both parties want it. Although the proposed clause grants both contract ...

This paper proposes a coalitional game-theoretical model for consumers’ flexibility coalition formation, supported by an optimization based on differential evolution. Traditionally, the participation in conventional electricity markets used to be limited large producers and consumers. The final end-users contract their energy supply with retailers, since due smaller quantity available trading, ...

We develop an option model to quantify and price a flexible supply contract, by which the buyer (a manufacturer), in addition to a committed order quantity, can purchase option contracts and decide whether or not to exercise them after demand is realized. We consider both call and put options, which generalize several widely practiced contracting schemes such as capacity reservation and buy-bac...