Procurement Strategies for Multiple Inputs
This paper analyzes the procurement decision of a firm that produces a single commodity output using two commodity inputs. The firm can source the two inputs in advance of the selling season through long-term contracts or from the spot markets. We investigate the impact of using different contract t...
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| Main Authors: | , |
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| Format: | text |
| Language: | English |
| Published: |
Institutional Knowledge at Singapore Management University
2012
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| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/lkcsb_research/3262 |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | This paper analyzes the procurement decision of a firm that produces a single commodity output using two commodity inputs. The firm can source the two inputs in advance of the selling season through long-term contracts or from the spot markets. We investigate the impact of using different contract types (fixed-price versus index-priced) on the profitability of the firm. The main motivation comes from a soda ash producer located in India that procures multiple commodity inputs for production. |
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