Date of Award
2019
Publisher
North Dakota State University
Document Type
Thesis
Degree Awarded
Master of Science (MS)
Program
Agribusiness and Applied Economics
Department
Agribusiness and Applied Economics
College
Agriculture, Food Systems and Natural Resources
Faculty Advisor
Wilson, William W.
Description
Inventory management in the agriculture industry involves many sources of risk in terms of demand uncertainty as well as uncertain margins. Divulging an optimal inventory strategy can prove cumbersome to logistics managers. In this thesis, inventory is viewed as a real option on the ability to operate. Contingent claims inventory (CCI) analysis, paired with stochastic binomial real option valuation, provides a model which values the real option embedded in holding inventory and iterates the purchasing strategy until expected profit is maximized. This framework is applied to three industry cases pertaining to: wheat flour milling, fertilizer merchandising, and bulk shipments via primary rail contracts.
Recommended Citation
Klebe, Jesse Daniel, "Optimal Inventory Strategy Under Risk: A Contingent Claims Approach" (2019). Agribusiness and Applied Economics. 134.
https://digitalcommons.ndsu.edu/agribusiness-applied-econ/134
Rights
NDSU policy 190.6.2
Rights Link
https://www.ndsu.edu/fileadmin/policy/190.pdf
Author ORCID Identifier
0000-0002-8074-5904
Handle Identifier
https://hdl.handle.net/10365/29792