IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v118y2009i1p146-151.html
   My bibliography  Save this article

Optimal procurement portfolios when using B2Bs: A model and analysis

Author

Listed:
  • Ganeshan, Ram
  • Boone, Tonya
  • Aggarwal, Prabhu

Abstract

B2Bs are online markets where buyers and sellers trade products either in the spot market or via derivate instruments such as option contracts. Our goal in this paper is to show how procurement managers, in addition to buying on the spot market in cash (physical transactions), can integrate risk management tools (paper transactions) to mitigate risk over multiple time periods. Specifically, our scenario includes a buyer who is making procurement decisions to satisfy demand. Demand can be satisfied either by buying and exercising options on the B2B (for a price) or by directly trading on the spot market with an uncertain spot market price distribution. Over a two-period time horizon, we provide a model to compute the optimal number of options and physical quantities of the product that are needed to satisfy demand while minimizing relevant procurement and inventory costs over the two periods.

Suggested Citation

  • Ganeshan, Ram & Boone, Tonya & Aggarwal, Prabhu, 2009. "Optimal procurement portfolios when using B2Bs: A model and analysis," International Journal of Production Economics, Elsevier, vol. 118(1), pages 146-151, March.
    • Handle: RePEc:eee:proeco:v:118:y:2009:i:1:p:146-151
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(08)00258-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Aggarwal, Prabhu & Ganeshan, Ram, 2007. "Using risk-management tools on B2Bs: An exploratory investigation," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 2-7, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gunasekaran, Angappa & McGaughey, Ronald E. & Ngai, Eric W.T. & Rai, Bharatendra K., 2009. "E-Procurement adoption in the Southcoast SMEs," International Journal of Production Economics, Elsevier, vol. 122(1), pages 161-175, November.
    2. Xu, Jinpeng & Feng, Gengzhong & Jiang, Wei & Wang, Shouyang, 2015. "Optimal procurement of long-term contracts in the presence of imperfect spot market," Omega, Elsevier, vol. 52(C), pages 42-52.
    3. Quirós Romero, Cipriano & Rodríguez Rodríguez, Diego, 2010. "E-commerce and efficiency at the firm level," International Journal of Production Economics, Elsevier, vol. 126(2), pages 299-305, August.
    4. Gülpınar, N. & Oliveira, F.S., 2012. "Robust trading in spot and forward oligopolistic markets," International Journal of Production Economics, Elsevier, vol. 138(1), pages 35-45.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gülpınar, N. & Oliveira, F.S., 2012. "Robust trading in spot and forward oligopolistic markets," International Journal of Production Economics, Elsevier, vol. 138(1), pages 35-45.
    2. Quirós Romero, Cipriano & Rodríguez Rodríguez, Diego, 2010. "E-commerce and efficiency at the firm level," International Journal of Production Economics, Elsevier, vol. 126(2), pages 299-305, August.
    3. Wu, Jun & Li, Jian & Wang, Shouyang & Cheng, T.C.E., 2009. "Mean-variance analysis of the newsvendor model with stockout cost," Omega, Elsevier, vol. 37(3), pages 724-730, June.
    4. Xu, Jinpeng & Feng, Gengzhong & Jiang, Wei & Wang, Shouyang, 2015. "Optimal procurement of long-term contracts in the presence of imperfect spot market," Omega, Elsevier, vol. 52(C), pages 42-52.
    5. Trkman, Peter & McCormack, Kevin, 2009. "Supply chain risk in turbulent environments--A conceptual model for managing supply chain network risk," International Journal of Production Economics, Elsevier, vol. 119(2), pages 247-258, June.

    More about this item

    Keywords

    B2B Spot markets Options;

    JEL classification:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:118:y:2009:i:1:p:146-151. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.