Research On The Optimal Strategies For The Multistage Multiple Purchasing When Purchase Price Is Uncertain

Purchasing cost includes the raw material cost of commodity and other expenditures raised during the process of procurement. Studies have shown that the raw material and service purchasing cost in the manufacturing industry accounts about 50% to 80% of the total cost. Being affected by the increasing shortage of resources in the world, the prices of procurement in the enterprises of manufacturing are on the trends of increasing day by day. And there might be tremendous price fluctuation in a very short time, which makes the price has high uncertainty and brings huge pressure to the enterprise purchasing decision. When enterprises face the fluctuation of raw materials, they always have no purchasing strategies to handle this problem. So, the research on the price fluctuation and the cost-reduction purchasing strategies shows great reality significance.This paper mainly focuses on the Price Taker which means the medium and small scale enterprises, and even individual buyer. Because of cash flows limitation and small purchasing amount, they are unable to sign long term purchasing contracts with the suppliers or have the tools of future option to avoid price risk when market price fluctuates.The purchasing price models based on the option contracts and dynamic programming are studied. After that, this paper does research on the optimal strategy for multistage one-time and multistage multiple procurement. At last, verify the effectiveness of dynamic strategies on the cost reduction through the cases study.