Foundations and Trends® in Technology, Information and Operations Management > Vol 12 > Issue 2-3

Risk Management in Commodity Processing Firms

Hamed Ghoddusi, Stevens Institute of Technology, USA, hghoddus@stevens.edu
 
Suggested Citation
Hamed Ghoddusi (2019), "Risk Management in Commodity Processing Firms", Foundations and TrendsĀ® in Technology, Information and Operations Management: Vol. 12: No. 2-3, pp 219-239. http://dx.doi.org/10.1561/0200000093

Published: 14 Mar 2019
© 2019 H. Ghoddusi
 
Subjects
 
Keywords
G32 Financial Risk and Risk ManagementM11 Production management
Risk managementHedgingOperational riskSupply chain finance
 

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In this article:
1. Introduction
2. Literature Review
3. Quick Overview of Commodity Hedging
4. Model
5. Results and Equilibrium Outcomes
6. Extensions and Suggestions for Future Research
7. Conclusion and Managerial Lessons
References

Abstract

We introduce an equilibrium view of profit hedging in a representative commodity processing industry. The commodity processor takes shocks to the supply of the primary commodity and the demand for the processed commodity as given and chooses the optimal quantity of production. Such a model generates an endogenous stochastic profit stream for the processor, which is possibly substantially different than input and output prices. Thus, absent financial instrument specifically on the spread, hedging input or output prices alone may only provide poor partial hedging to the processor.

DOI:10.1561/0200000093
ISBN: 978-1-68083-554-0
298 pp. $99.00
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ISBN: 978-1-68083-555-7
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Table of contents:
Introduction and Conceptual Overview of Contents
Part 1: Supply Chain Finance
Material and Cash Flow in Two-Tier Supply Chain with Trade Credits and Defaults
Financing Suppliers under Performance Risk
Blockchain and other Distributed Ledger Technologies in Operations
Cash Beer Game
Part 2: Financial Hedging and Commodity Risks
A Framework of Hedging Decisions for Supply Chain Partners
Data and Risk Analytics for Production Panning
Risk Management in Commodity Processing Firms: An Equilibrium View
Quadratic Hedging of Commodity and Energy Cash Flows
Optimal Positioning in the Derivative Market: Review, Foundations, and Trends
Part 3: Operational Strategies and Risk Management
Corn, Soybean or Fallow: Dynamic Farmland Allocation Under Uncertainty
Disruption Risk Management in Serial Multi-Echelon Supply Chains: Where to hold Risk Mitigation Inventory and Reserve Capacity
Financial Incentives to Avoid Major Quality Problems in a Supply Chain
Specific Capacity Investment in Supply Chains with Renegotiation

Emerging Technology & Advances in Supply Chain Finance & Risk Management

Emerging Technology & Advances in Supply Chain Finance & Risk Management reflects the state-of-the-art in research thought leadership in supply chain finance and risk management, and it contains great expository pieces on how advanced technologies are shaping supply chains and risk management within them. You will also find ideas on how supply chain finance and risk management can be best taught in our classrooms.

The volume is divided into three parts, each part reflecting a major active research area of the field including: Part 1: Supply Chain Finance; Part 2: Financial Hedging and Commodity Risks; Part 3: Operational Strategies and Risk Management.

Part 1 deals with the broad area of supply chain finance and programs that will better allow for working capital management within supply chains. Part 2 introduces concepts of hedging financial and operational risks due to uncertain commodity prices, fluctuating exchange rates, and volatile interest rates. Emphasis is placed on understanding how financial hedges can be used for hedging relevant supply chain risks in a way that reflects modern view of financial risk management. Part 3 examines topics and solution approaches reflecting the more traditional treatments in the contemporary literature of operational and supply chain risks. This volume provides rich implications for future research directions in efforts to master the new complexities and uncertainties of the global business environment and better understand the impact of advanced technologies in global supply chains.

 
TOM-093

Companion

Foundations and TrendsĀ® in Technology, Information and Operations Management, Volume 12, Issue 2-3 Special Issue: Emerging Technology & Advances in Supply Chain Finance & Risk Management
See the other articles that are also part of this special issue.