Research On Fresh Agricultural Products Supply Chain Coordination Mechanism With Option Contract

Fresh agricultural products are kinds of special agricultural products, which areindispensable necessities and closely related to people’s daily life. The developmentof fresh agriculture products industry is becoming the focus of academia, governmentand business little by little. In China, the logistics industry of agricultural productsstarted late, the level of logistics technology is very low. In the process oftransportation, the technology of preservation, packaging, processing is relativelylagging. The trading mode is unitary. Besides, there are also many deficiencies in thefresh products supply chain management.In this article, based on the research results of fresh agricultural products supplychain at home and abroad, considering the participants’ irrational behavior andcharacteristics of fresh agricultural products in the transaction process, we researchfresh agricultural products supply chain coordination problem. The main researchtools include the game theory and information economics, finance, institutionaleconomics, general equilibrium theory and related knowledge. About the principalresearch contents, first，we analyze the fresh agricultural products supply chainoperation under options contract made by the supplier, as well as no options contract.We also research how various factors influence the supply chain operation. Then, weanalyze the supply chain coordination mechanisms of other contracts, such as quantitydiscount contract and so on. Based on these researches, we compare the affects ofthose contracts, and put forward the optimal operation model. With summarizing thesupply chain coordination mechanism research results and irrational paper researchresults in the domestic and overseas, we analyze the supply chain operationmechanism under irrational overconfidence condition. Furthermore, we deeplyanalyze the affect of overconfidence on fresh agricultural products supply chain. Atlast, we establish the supply chain participants’ profit functions by existingoverconfidence and options contracts, then we discuss how the retailer’soverconfidence affect the order quantities decision and supply chain profit. Based onthe above research, we use options contracts to coordinate fresh agricultural productssupply chain.Further research in this paper, we broaden the width of the fresh agriculturalproducts supply chain research, enrich the research methods in the field. The innovation of this paper lies in: we break the limitation of rational man, introduce theretailer’s overconfidence on judging the market demand; we construct a quantitativemodel for options contracts, coordinating fresh agricultural products supply chain byoption contracts, proposed a new method of optimization the fresh agriculturalproducts supply chain. Through this research, this paper intends to put forward amethod of using options contracts to optimize the fresh agricultural pro ducts supplychain.