Supply Chain Profit Research Based On Variable Option Exercise Price

Supply chain is composed of companies with independent accounting and different expectant profit .Accompanied with different profit target between supply chain members leads low overall efficiency and activity of supply chain especially under the instability economic situation. So how to coordinate management, to avoid risks and to improve the system profit has becomes an important task of supply chain management. Being one of effective means to coordinate supply chain system, supply chain option being stimulate investors to invest becoming the important issues of supply chain management research."Investment Risk" and how to optimize the benefits are two main reasons in supply chain management. Now "Investment risk"issue is the hottest topics under the global financial crisis. These problems focus on market prospects and the best investment period, plenty of results have been achieved from large number of literature at home and abroad about research on option and the optimize benefits is the final goal, focusing on pricing, quantity flexibility, the optimal order quantity and the optimal order quantity question are attracted much attention because of its universality. Risky investment and optimized revenue these two aspects are studied in variable executive price of option in supply chain revenue models. The existing literature shows that most research concentrates on standard European call option between single supplier and single retailer, little of the research takes variable executive price and variable option buy time, more of them are given general analytical framework, lack of specific analysis. However, in actual economic activity, companies are always being a part of a supply net and being interact, so retailer is admitted to wait-and-see market then made an order under the changing market and demand will be more practical. Based on this sense, we make some research in this article as follows:In the first part, we study the rule of option executive price, option price by different option buy time and the retailer's optimal benefit under retailer is admitted observed market between single supplier and single retailer. Further more, compared the optimal profit is better than the benefit under condition of fixed option executive price.In the second part, we study the methods and theory of important determining factor about formulating option exercised price and option price based on the first part. Moreover, we point out how to solving the relevant parameters through numerical example.In the last part, we study supplier how to make steps in case of variable option exercise price, the supplier's optimal decision is given through numerical example. At last, we draw a conclusion that the profit of the supplier under the variable option exercise price is superior to the case of fixed option exercise price.