Research On Manufacturing Supply Chain Price Risk Evasion With Financial Derivatives

In any economy society, the risk of price fluctuation exists certainly. If we're failed to evade the risk, the operation of the supply chain will become unwell. As the formation of the derivatives, people take advantage of future market and other derivatives, looking for the methods to transfer the supply chain price risk.Firstly this paper reviews and summaries the methods of the existing theory in evading supply chain price risk. And then an analysis is done for the advantages and shortcomings of involved theory in this field. On the basis of the achievements up to date made in domestic and abroad, a set of models evading supply chain price risk is proposed, which is correspond to the manufacturing supply chain features especially.To research how the manufacturer face to the raw materials price up. They should reduce price risk fundamentally on cost to ensure the profit. Then through the design of the combined lease, the clause should encourage the downstream distributors to participation in the coordinated operations on supply chain to maintain the effectiveness and stability of cooperation. Such a mechanism should be able to increase the profits of the whole supply chain, through the internal price setting, reasonably distribute the receipts and risk to achieve the optimal pareto optimal.The paper uses the Lower Partial Moment theory and option contracts which have unparalleled superiority with others. Not only reflect the characteristics of risk participants more accurate the method also consider how to encourage supplier and distributors to share profits and risks. Author thinks it has relatively strong practice and the effects of implementation.The calculation difficulties and option model parameters setting should be solved in this paper, using skewness distribution and model analysis.