Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/18059
Title: Transfer of newsvendor inventory and supply risks to sub-industry and the public by financial instruments
Authors: Hung, YH 
Li, LYO 
Cheng, TCE 
Keywords: Capacity allocation game
Options on super capacity futures
Risk pooling
Super capacity futures
Issue Date: 2013
Publisher: Elsevier
Source: International journal of production economics, 2013, v. 143, no. 2, p. 567-573 How to cite?
Journal: International journal of production economics 
Abstract: We consider a two-stage newsvendor model of a sub-industry in which suppliers have short lead-time capacity to produce goods for retailers that are selling non-identical products. We argue that the inventory and supply risks of the newsvendors due to demand uncertainty can be pooled and shared among different supply chains by treating reserved capacity as commodities and trading them as futures and options on futures to hedge the risks. The risks will be further shared with and transferred to the public if speculators are allowed to play the game. We show that this new mechanism of combining operational and financial risk hedging strategies offers industries a new way to more efficiently meet demand and improve profit.
Description: This Special Issue contains papers presented at the Sixteenth International Symposium on Inventories, held in Budapest, Hungary in August 2010.
URI: http://hdl.handle.net/10397/18059
ISSN: 0925-5273
DOI: 10.1016/j.ijpe.2011.10.019
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