Game Model of Agricultural Product Supply Chain Under Hybrid Ordering and Option Contracts with Random Yield and Random Demand

This paper investigates the impacts of hybrid ordering option contracts—combining fixed procurement and flexible option-based ordering—on the decision-making and profits of supply chain members in an agricultural product supply chain characterized by dual randomness in production yield and market demand. Within a Stackelberg game framework where the supplier acts as the dominant leader, we first establish a wholesale price contract benchmark model. We then formulate a basic hybrid ordering option contract model and derive the retailer’s optimal fixed order quantity, optimal option order quantity, and the supplier’s optimal production input level. On this basis, we propose an improved hybrid ordering option contract model that incorporates an emergency ordering strategy, and derive the parameter conditions for achieving supply chain coordination. The analytical results reveal that the basic option contract improves expected profits for both parties but fails to achieve full coordination. In contrast, the improved contract achieves full coordination when the emergency ordering price is set such that the supplier prefers emergency orders over salvage, a condition explicitly derived in the coordination analysis. Furthermore, Pareto improvement is attained when the improved contract satisfies this condition, ensuring that neither party is worse off compared to the basic contract scenario. Sensitivity analysis further examines how key parameters—including the wholesale price, option purchase price, and option exercise price—affect optimal decisions and expected profits. The findings provide theoretical references for the practical management of agricultural product supply chains.

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Publication Details

Journal
Mathematics
Published
2026-10-15
DOI
https://doi.org/10.3390/math14203745
Primary Topic
Supply Chain and Inventory Management
Type
article
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article

Game Model of Agricultural Product Supply Chain Under Hybrid Ordering and Option Contracts with Random Yield and Random Demand

Jialin Zheng
Mathematics
Supply Chain and Inventory Management
article

Game Model of Agricultural Product Supply Chain Under Hybrid Ordering and Option Contracts with Random Yield and Random Demand

Jialin Zheng
article en

Abstract

This paper investigates the impacts of hybrid ordering option contracts—combining fixed procurement and flexible option-based ordering—on the decision-making and profits of supply chain members in an agricultural product supply chain characterized by dual randomness in production yield and market demand. Within a Stackelberg game framework where the supplier acts as the dominant leader, we first establish a wholesale price contract benchmark model. We then formulate a basic hybrid ordering option contract model and derive the retailer’s optimal fixed order quantity, optimal option order quantity, and the supplier’s optimal production input level. On this basis, we propose an improved hybrid ordering option contract model that incorporates an emergency ordering strategy, and derive the parameter conditions for achieving supply chain coordination. The analytical results reveal that the basic option contract improves expected profits for both parties but fails to achieve full coordination. In contrast, the improved contract achieves full coordination when the emergency ordering price is set such that the supplier prefers emergency orders over salvage, a condition explicitly derived in the coordination analysis. Furthermore, Pareto improvement is attained when the improved contract satisfies this condition, ensuring that neither party is worse off compared to the basic contract scenario. Sensitivity analysis further examines how key parameters—including the wholesale price, option purchase price, and option exercise price—affect optimal decisions and expected profits. The findings provide theoretical references for the practical management of agricultural product supply chains.

MathematicsVol. 14(20)
Beijing Institute of Petrochemical Technology (CN), Development Research Center (CN)
Zero hunger
Openalex Percentile: Top 6%
Supply Chain and Inventory Management
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