2026-09-18T21:05:05Zhttps://ecommons.cornell.edu/server/oai/requestoai:ecommons.cornell.edu:1813/1942026-05-14T13:49:53Zcom_1813_35col_1813_47
Golovachkina, Natalia
2004-09-23T17:51:30Z
2004-09-23T17:51:30Z
2004-09-23T17:51:30Z
https://hdl.handle.net/1813/194
6475954
In this dissertation I analyze performance of the contract for options in
various settings.
In the second chapter, I consider a contract for options between a
supplier and a manufacturer in the presence of a spot market with uncertain
spot price, limited supplier capacity, and where the manufacturer must
fulfill the stochastic demand of a downstream supply-chain link in full. I
model the contract negotiation as a two-stage Stackelberg game in which the
supplier is the leader. I derive a closed-form expression for the optimal
number of options that the manufacturer should purchase, and show the
(unrestrictive) conditions under which the supplier's profit is unimodal in
the reservation and exercise prices. I make observations based on analytical
results and numerical experimentation to assess when such a contract is
incentive compatible for the players and effective in coordinating the
channel.
In the third chapter, I analyze different mechanisms that lead to
channel coordination. Specifically, I show channel coordination is achieved
by a contract for options when the manufacturer is the leader, when a
quantity discount contract is used, and when renegotiation is allowed. I
demonstrate how different coordinating mechanisms affect the allocation of
the profits between the supplier and the manufacturer and give some insight
on when each mechanism might be appropriate. I highlight the desirability of
renegotiation as a coordinating mechanism by showing that it is robust --
coordination is achieved despite information asymmetry -- and leads to a
more equitable sharing of the contract benefits than do the other mechanisms.
In the forth chapter, I evaluate capacity investment decisions of
the players in the supply chain consisting of a supplier and two identical
manufacturers. I compare the performance of the linear-price contract (when the
supplier must use an allocation mechanism) with that of the contract for options.
I demonstrate that when the supplier sets transfer prices, the
contract for options performs only slightly better than the linear-price
contract, which implies that the contract for options is not always an
obvious choice over the linear-price contract.
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contract for options
supply chain coordination
Performance Analysis of Contract for Options
dissertation or thesis
application/pdf
Publication
Cornell Theses and Dissertations
Golovachkina, Natalia
5893a6ea-7af3-41d7-abc6-04bcd26ab5df
open.access
open.access
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<Abstract>In this dissertation I analyze performance of the contract for options in
various settings.
In the second chapter, I consider a contract for options between a
supplier and a manufacturer in the presence of a spot market with uncertain
spot price, limited supplier capacity, and where the manufacturer must
fulfill the stochastic demand of a downstream supply-chain link in full. I
model the contract negotiation as a two-stage Stackelberg game in which the
supplier is the leader. I derive a closed-form expression for the optimal
number of options that the manufacturer should purchase, and show the
(unrestrictive) conditions under which the supplier's profit is unimodal in
the reservation and exercise prices. I make observations based on analytical
results and numerical experimentation to assess when such a contract is
incentive compatible for the players and effective in coordinating the
channel.
In the third chapter, I analyze different mechanisms that lead to
channel coordination. Specifically, I show channel coordination is achieved
by a contract for options when the manufacturer is the leader, when a
quantity discount contract is used, and when renegotiation is allowed. I
demonstrate how different coordinating mechanisms affect the allocation of
the profits between the supplier and the manufacturer and give some insight
on when each mechanism might be appropriate. I highlight the desirability of
renegotiation as a coordinating mechanism by showing that it is robust --
coordination is achieved despite information asymmetry -- and leads to a
more equitable sharing of the contract benefits than do the other mechanisms.
In the forth chapter, I evaluate capacity investment decisions of
the players in the supply chain consisting of a supplier and two identical
manufacturers. I compare the performance of the linear-price contract (when the
supplier must use an allocation mechanism) with that of the contract for options.
I demonstrate that when the supplier sets transfer prices, the
contract for options performs only slightly better than the linear-price
contract, which implies that the contract for options is not always an
obvious choice over the linear-price contract.</Abstract>
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