Junyan Wang's research while affiliated with Tianjin University of Science and Technology and other places

In this paper, we study option contracts for emergency material reserves due to unexpected events. Contingencies occur randomly and the amount of realization cannot be known until it breaks out. Therefore, it is important to stockpile some necessary supplies in advance. However, a large advance stockpile on the demand side would incur low-carbon disposal costs, which are not economical. Also, the supplier will have no incentive to stockpile for the demander due to low carbon disposal costs and production costs. Therefore, we propose a contractual approach with option to stimulate supplier to stockpile for his client. Three models are discussed based on the consideration of low-carbon disposal costs: a centralized decision case, a non-option decentralized case, and a decentralized case with option. The outcomes demonstrate that the number of first orders under the decentralized case without option is less than the order quantity under the centralized case. Moreover, the size of the first purchase volume in all three cases depends on the both parties’ practical factors. Meanwhile, the reasonable interval of option fee is obtained by analysis.

This paper investigates an option contract for emergency material reserve because of quality catastrophic change. The quality catastrophic change happens randomly and the realized number can not be observed until it happened. Thus, it is necessary to reserve some emergency material beforehand. However, the demander is not qualified to make the storage. Meanwhile, the supplier has no motivation to make storage for the demander. Thus, an option contract is proposed to encourage the supplier to make backup for the demander and share the shortage cost if the backup less than the realized option order quantity. Three models are discussed: the centralized model without option, the decentralized model without option, and the decentralized model with option. The results demonstrate that the order quantity for the first time under the centralized scenario is greater than that under the decentralized model without option. And, the order of the purchase quantity for the first time under the three scenarios depend on the parameters decided by the both players. Meanwhile, through analysing, the effective range of option fee is proved to be limited to an interval.