EXCHANGE RATE RISK IN A NEWSVENDOR FRAMEWORK UNDER A GAMMA- DISTRIBUTED EXCHANGE RATE ERROR AND ISOELASTIC DEMAND

Authors

  • Zarana Mehta Research scholar, Department of Mathematics, Gujarat University, Ahmedabad, India
  • Ravi Gor Department of Mathematics, Gujarat University, Ahmedabad, India

DOI:

https://doi.org/10.29121/ijoest.v6.i5.2022.403

Keywords:

Transaction Exposure, Exchange Rate Error, Newsvendor Problem, Optimal Pricing And Quantity, Gamma Distribution

Abstract

In a global supply chain consisting of one retailer and one manufacturer, both from specific countries, when there is a time lag between the payments made whilst placing the order and the time when the order is realized, threat in the form of exchange rate fluctuation influences the optimal pricing and order quantity decisions. We explain the effect of exchange rate fluctuation underneath Gamma distribution when the retailer or producer undertakes to share the exchange rate risk and the demand error is modelled in the multiplicative form in the news vendor framework.

Downloads

Download data is not yet available.

References

Arcelus, F.J., Gor, R. M., and Srinivasan, G. (2013).Foreign Exchange Transaction Exposure in a Newsvendor Setting, European Journal of Operational Research, 227(3), 552-557. https://doi.org/10.1016/j.ejor.2012.10.014.

Eitemann, D.K., Stonehill, A.I., and Moffett, M.H. (2010). Multinational Business Finance, 12th Ed.Prentice Hall, Boston.

Goel, M. (2012). Management of Transaction Exposure: A Comparative Analysis of Mncs in India. International Journal of Service Science, Management, Engineering and Technology3, 37-54. https://doi.org/10.4018/jssmet.2012010103.

Karlin, S., and Carr, C.R. (1962). Prices and optimal inventory policy. In : Arrow, K.J., Scarf, H. (Eds.), Studies in Applied Probability and Management Science. Stanford University Press, Palo Alto, CA, 159-172.

Mehta, Z., Gor, R. (2020)."Mathematical Model of Foreign Exchange Risk in a Supply Chain with Newsvendor Setting using a Log- Normally Distributed Exchange Rate Error." IOSR Journal of Economics and Finance (IOSR-JEF), 11(5), 48-57.

Mehta, Z., Gor, R. (2020). Transaction Exposure Model under Gamma Distribution Exchange Rate Error in a Newsvendor Framework, Alochana Chakra Journal, 9(6), 4028-4032.

Mehta, Z., Gor, R. (2021)."Transaction Exposure Model Using Gumbel Distribution Exchange Rate Error in a Newsvendor Framework." IOSR Journal of Mathematics (IOSR-JM), 17(3), 39-47.

Mehta, Z., Gor, R. (2022)."Transaction Exposure Model Under Exponential Distribution Exchange Rate Error with Newsvendor Setting", 14(3), 25-36.

Mills, E.S. (1958). Uncertainty and price theory, Quarterly Journal of Economics 73, 116-130. https://doi.org/10.2307/1883828.

Patel, S. and Gor, R. (2016a). A Newsvendor Framework of Exchange Rate Risk with Uniformly Distributed Exchange Rate Error, International Journal of Research in Engineering and Technology, 5(5), 412-416. https://doi.org/10.15623/ijret.2016.0505079.

Patel, S. and Gor, R. (2016b). A Newsvendor Framework of Transaction Exposure Model With Uniformly Distributed Exchange Rate Error and Isoelastic Demand, International Journal of Science, Engineering and Technology Research, 5(6), 1904-1908.

Patel, S., and Gor, R. (2015). Exchange Rate Risk Sharing Contract Model, IOSR Journal of Mathematics (IOSRJM), 11(2), 47-52.

Patel, S., and Gor, R. (2015). Transaction Exposure Risk Modelled in a Newsvendor Framework Under the Multiplicative Demand Error, IOSR Journal of Mathematics (IOSR -JM),11(2), 53-59.

Patel, S., and Gor, R. (2015). Exchange Rate Risk Sharing Contract Model, IOSR Journal of Mathematics (IOSRJM), 11(2), 47-52.

Patel, S., and Gor, R. (2015). Foreign Exchange Transaction Exposure Within a Newsvendor Frame Work Under Hybrid Demand Distribution- IOSR Journal of Mathematics (IOSR-JM), 11(5), 51-58.

Petruzzi, N.C., and Dada, M. (1999). Pricing and the Newsboy Problem: A Review with Extensions. Operations Research 47, 183-194. https://doi.org/10.1287/opre.47.2.183.

Patel, S. and Gor, R. (2016). Exchange Rate Risk in a Newsvendor Framework with Normally Distributed Exchange Rate Error, International Journal of Mathematics Trends and Technology, 34(2), 54-58. https://doi.org/10.14445/22315373/IJMTT-V34P512.

Shubita, M.F., Harris, P., Malindretos, J., and Bobb, L.M. (2011). Foreign Exchange Exposure: An Overview. International Research Journal of Finance and Economics 78, 171- 177.

Whitin, T.M. (1955). Inventory Control and Price Theory, Management Science, 2(1), 61-68. https://doi.org/10.1287/mnsc.2.1.61.

Downloads

Published

2022-10-10

How to Cite

Mehta, Z., & Gor, R. (2022). EXCHANGE RATE RISK IN A NEWSVENDOR FRAMEWORK UNDER A GAMMA- DISTRIBUTED EXCHANGE RATE ERROR AND ISOELASTIC DEMAND. International Journal of Engineering Science Technologies, 6(5), 34–45. https://doi.org/10.29121/ijoest.v6.i5.2022.403

Most read articles by the same author(s)

1 2 > >>