Multisources Risk Management in a Supply Chain under Option Contracts

Table 2

Notation.

Symbol	Description
	Supplier’s random yield rate, which is characterized by (CDF) and (PDF). , .
	End-product’s market demand, which is a random variable with (CDF) and (PDF). , .
	Wholesale price ($)
	Option price ($)
	Exercise price($)
	Supplier’s production quantity
	Manufacturer’s firm order quantity
	Manufacturer’s option order quantity
	Spot market price ($), which is a random variable with (PDF) and (CDF). , .
	Production cost for the component ($)
	Retail price for the end-product ($)