Study Of B2B E-Marketplace Supply Chain Coordination Based On Option Contract

In the past two decades, operations management experiences significant developments in following areas:As the Internet and computer technology becomes more mature and efficient, a new industry, called B2B electronic market exchange, emerges. It provides a platform to efficiently identify and match suppliers and buyers and help them conduct business transactions through Internet.The industry world is getting increasingly connected. The success of one company often time relies on coordination with its partners. There has been a paradigm shift from optimal planning within an organization to proper coordination for the supply chain the company involved. Various supply chain contracts have been designed to align objectives of supply chain members to achieve supply chain coordination.More recently, financial instruments such as options have been adopted into contract design in supply chain management to better distributing risk among supply chain members. These newly developed contracts also allow the supply chain to better respond to and hedge customer demand.In view of the above developments, my thesis studies the optimal contract design for a supply chain whose transactions are conducted through B2B electronic exchange. In particular, the thesis makes the following contributions:a. It provides a systematic survey of various contracts for supply coordination, including both traditional contracts as well as contracts involve options. The advantages and disadvantages of, each contract are commented. It provides a detailed introduction and description of various types of B2B electronic markets and their functions.b. An option-based contract is proposed to coordinate a supply chain whose transactions are conducted through B2B electronic exchange. Based on theoretical analysis, conditions are obtained for the option contract to coordinate the supply chain. Sensitivity analysis is conducted to study the property of the contract. Finally, numerical examples are provided to show the profit division among supply chain members.