Research On Option Contracts Of Fashion Supply Chain Based On Demand Forecast

Fashion products refer to products with long lead time,short sales season,and low residual value at the end of the sales season,such as clothing and flowers.The market demand for such products is often uncertain.The uncertainty of the market demand for fashion products leads to the conflict between supply and demand between the fashion supply chain system and consumers,as well as the contradiction between manufacturers and retailers regarding the ordering time.This is an urgent problem for each member company of the fashion supply chain.In order to deal with the negative impact of uncertain market demand,after issuing the first batch of orders,the retailer updates the demand forecast according to market demand information and then makes a second batch of orders based on the updated market demand forecast,thereby correcting the total order quantity before the sales season comes.In essence,the impact of market demand instability is weakened through multi-stage ordering.An option contract is a financial derivative instrument that is used to transfer rights in the financial field,that is,the buyer can buy a specific commodity at a specific price in a specific future time after paying the premium in advance.The introduction of option contracts into the fashion supply chain system can adjust the retailer's order for fashion products.On the one hand,it can transfer the risk of uncertain market demand from the retailer to the manufacturer,and on the other hand,it adds a part of the royalties to the manufacturer.Taking the supply chain consisting of A manufacturer and A retailer as the research object,the expected profit model of the supply chain system in centralized decision-making and the expected profit model of retailers and manufacturers in decentralized decision-making are respectively constructed under the stock shortage or not at the end of the sales season.Taking the maximum expected profit as the goal of decision-making,the optimal decision vectors for supply chain systems,retailers,and manufacturers were solved by dynamic programming,and the impact of related variables on expected profits was analyzed by numerical simulation.The results show that:(1)There is an optimal time for the retailer to execute the option,and whether the manufacturer performs the second production depends on the total optimal production quantity of the manufacturer and the production quantity at the initial moment;(2)Regardless of the stock shortage or not,the optimal production quantity of the manufacturer at the initial moment is the same;(3)The manufacturer's production quantity at the initial moment will not affect the retailer's expected profit.