Fresh Agricultural Product Supply Chain Decision-making Based on Call Options under Epidemic Risk
During the COVID-19 period,lockdowns or traffic restrictions have severely disrupted the circulation of fresh agricultural products and exposed the fresh agricultural products supply chain to risk of in-terruption,which caused great impact to the supply and retail of fresh agricultural products.In order to solve the problems of the supply and purchasing of fresh agricultural products in future epidemic scenarios,we in-tended to use the option theory with flexible order quantity and execution time to solve the decision-making problem of a fresh agricultural product supply chain.In this research,in the context of a threatening epidemic,we constructed a single-cycle two-stage fresh agricultural products supply chain composed of a fresh agricul-tural product supplier and a retailer,in which the supplier is the dominant player.Then,we introduced the call option theory and used the Stackelberg game to study the retailer's optimal option ordering strategy and the supplier's optimal option pricing strategy.The result shows:(1)The retailer has an optimal option ordering quantity,and the optimal option ordering quantity is a decreasing function of the epidemic risk coefficient,op-tion ordering price and option execution price,and an increasing function of the freshness of fresh agricultural products;(2)The supplier does not have a solution which could jointly achieve optimal option ordering price and optimal option execution price,but when either of the two is achieved,the supplier's optimal expected profit can be obtained.(3)The supplier can increase their own expected profit by increasing the option order-ing price or option execution price,but at the cost of greater loss to the retailer's expected profit in relation to the supplier's gain,which will lead to reduced total expected profit of the fresh agricultural products supply chain and thus is detrimental to the long-term development of the supply chain.According to the comparative analysis of the decentralized and centralized decision-making modes,if the supplier can appropriately reduce the option ordering price or the option execution price to meet certain constraints,it can achieve supply chain coordination and realize win-win between the supplier and the retailer.(4)There is an inflection point in the impact of the epidemic risk on the expected profit of the supply chain system.When the epidemic risk coeffi-cient is equal to this inflection point,the expected profits of the supplier,the retailer and the supply chain sys-tem will reach optimum.When the epidemic risk coefficient is lower than the inflection point,the expected profits of the supplier,the retailer and the supply chain system are all increasing functions of the epidemic risk.At this time,it is beneficial to the supply chain system for the retailer to subscribe to call options.On the con-trary,the expected profits of the supplier,the retailer and the supply chain system are all decreasing functions of the epidemic risk.At this time,the retailer's subscription of call options is detrimental to the supply chain sys-tem.Therefore,in the early stage of an epidemic and when the risk is low,it is recommended that the retailer subscribe to call options and the supplier appropriately lower the option prices,which is more conducive to the development of the supply chain;when the risk of the epidemic is high,the effect of the call options is not pro-nounced in the supply chain.
epidemic riskfresh agricultural productsupply chaincall optionsStackelberg game
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