Abstract The 1993 U.N. Straddling Stock Agreement,prescribes a multi-national or- ganizational st... more Abstract The 1993 U.N. Straddling Stock Agreement,prescribes a multi-national or- ganizational structure for management of an exploited marine fish stock, one whose,range straddles both ”Extended Economic,Zones” (EEZs) and high seas waters. However, the Agreement provides to the Regional Organization no co- ercive enforcement,powers. In this connections,two problems,in particular have been cited: The first, called the ”interloper problem”, concerns the difficulty
ABSTRACT In this paper we consider the transfer of risk in a newsvendor model with discrete deman... more ABSTRACT In this paper we consider the transfer of risk in a newsvendor model with discrete demand. We view the newsvendor model as a leader/follower problem where the manufacturer (leader) decides the wholesale price and the retailer (follower) decides the quantity ordered. Taking a Pareto-optimal contract as a starting point, the manufacturer wishes to design a real option contract to enhance profits. A new real option contract is said to be feasible if both parties' expected profit is at least as great as in the original contract. When demand is discrete, there are usually infinite feasible contracts that yield maximum expected profits to the manufacturer. In the paper we show that either all, some or none of these real option contracts offer an improved position for the retailer.
In this paper we consider the newsvendor model with real options. We consider a mixed contract wh... more In this paper we consider the newsvendor model with real options. We consider a mixed contract where the retailer can order a combination of q units subject to the conditions in a classical newsvendor contract and Q real options on the same items. We provide a closed form solution to this mixed contract when the demand is discrete and study some of its properties. We also offer an explicit solution for the continuous case. In particular we demonstrate that a mixed contract may be superior to a real option contract when a manufacturer has a bound on how much variance she is willing to accept.
Abstract The 1993 U.N. Straddling Stock Agreement,prescribes a multi-national or- ganizational st... more Abstract The 1993 U.N. Straddling Stock Agreement,prescribes a multi-national or- ganizational structure for management of an exploited marine fish stock, one whose,range straddles both ”Extended Economic,Zones” (EEZs) and high seas waters. However, the Agreement provides to the Regional Organization no co- ercive enforcement,powers. In this connections,two problems,in particular have been cited: The first, called the ”interloper problem”, concerns the difficulty
ABSTRACT In this paper we consider the transfer of risk in a newsvendor model with discrete deman... more ABSTRACT In this paper we consider the transfer of risk in a newsvendor model with discrete demand. We view the newsvendor model as a leader/follower problem where the manufacturer (leader) decides the wholesale price and the retailer (follower) decides the quantity ordered. Taking a Pareto-optimal contract as a starting point, the manufacturer wishes to design a real option contract to enhance profits. A new real option contract is said to be feasible if both parties' expected profit is at least as great as in the original contract. When demand is discrete, there are usually infinite feasible contracts that yield maximum expected profits to the manufacturer. In the paper we show that either all, some or none of these real option contracts offer an improved position for the retailer.
In this paper we consider the newsvendor model with real options. We consider a mixed contract wh... more In this paper we consider the newsvendor model with real options. We consider a mixed contract where the retailer can order a combination of q units subject to the conditions in a classical newsvendor contract and Q real options on the same items. We provide a closed form solution to this mixed contract when the demand is discrete and study some of its properties. We also offer an explicit solution for the continuous case. In particular we demonstrate that a mixed contract may be superior to a real option contract when a manufacturer has a bound on how much variance she is willing to accept.
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