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Coordination Mechanism Combining Supply Chain Optimization And Rule In Exchange

Author

Listed:
  • JINSHI ZHAO

    (Business School, Shanghai Normal University, Shanghai 200234, P. R. China;
    College of Economics and Management, Tongji University, Shanghai 200092, P. R. China)

  • JIAZHEN HUO

    (College of Economics and Management, Tongji University, Shanghai 200092, P. R. China)

Abstract

There are two kinds of option pricing. The option pricing in exchange follows the Black–Scholes rule but does not consider the optimizing of supply chain. The traditional supply chain option contract can optimize supply chain but does not meet the Black–Scholes rule. We integrate the assumption of above two kinds of option pricing, and design a model to combine the Black–Scholes rule and traditional option contract of optimizing in a supplier-led supply chain. Our combined model can guide the enterprises to write or buy option considering both option pricing rule in financial market and the optimization of supply chain. Then we simulate and verify the model in Zinc industry of China. It is proved that our option pricing model is equalized and optimal to supply chain and consistent with Black–Scholes rule.

Suggested Citation

  • Jinshi Zhao & Jiazhen Huo, 2013. "Coordination Mechanism Combining Supply Chain Optimization And Rule In Exchange," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 30(05), pages 1-13.
    • Handle: RePEc:wsi:apjorx:v:30:y:2013:i:05:n:s0217595913500152
    DOI: 10.1142/S0217595913500152
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