Study On Risk Control Of Procurement Contract Portfolio Management Decision

With the fierce competition of market environment,companies pay more and more attention of new ways to control the total cost—controlling enterprise purchase cost.So purchasing management will become focus of more and more enterprises. Purchasing and supply is not only the quality assurance, but also a source of profits. But procurement exist various kinds of market risk, for example: the risk factors of war, financial crisis, emergencies may lead to intense price fluctuate and unstabitily supply quantity.Managers must attach importance to these risks.Most of enterprise purchase is accomplished by purchasing contract.A single purchase contract can evade one aspect of purchasing risk. Therefore this paper discuss on portfolio different purchasing contracts to optimization purchasing decision. The way of portfolio different purchasing contracts can evade purchasing risk, reduce purchase cost and improve enterprise profits target.This paper mainly consists of three parts. The first part is literature review and related theory research. Mainly introduces the definition of purchase risk and the source of purchase risk and the influence of procurement emergencies,finally analyses the procurement contract types and the present study on portfolio purchasing contracts to circumvent purchase risk.The second part is the core part of this paper.It studies the portfolio of quantity flexibility contract and option contract optimize purchasing decision.Quantity flexibility contract can control inventory cost of buyers and satisfy buyers demand; option contract transfer part of market risk to suppliers, suppliers also have the corresponding risk compensation. The portfolio of two procurement contracts for buyers to purchase provide more flexible degrees. It is divided into two aspects:first, it studies the portfolio of the contract without the risk incident.Through the establishment of enterprise procurement decision- making model analysis the optimal order quantity of contract and parameters on the influence of corporate profits by actual data. Second, purchasing contract is studied in disruption risk case, the paper analyzes orders of decision-making and goals of buyers purchasing negotiation with suppliers under the different risk.The third part is the conclusion of this study to carry on the summary, pointed out the shortage of this paper and the prospects for future study.