An optimal raw material procurement strategy that minimizes enterprise price risks

Abstract

This article is devoted to the problem of theoretical and information support for decision-making in strategic management of raw material procurement processes. The study is timely, because there is currently significant volatility in prices for raw materials. This poses very difficult challenges for managers. Finding solutions is one of the most important areas of business informatics. This article discusses a procurement strategy in two stages: at the beginning and middle of the month. The price of raw materials is known only at the beginning of the month. Price is a continuous random variable. You can predict only the interval of its change. Here the interval is directly used to determine the purchase volume at a known price. The authors derived a functional dependence of the maximum risk according to Savage on the amount of purchased raw materials at the beginning of the month. As a result, it was possible to establish the amount of raw materials to be purchased at the beginning of the month to reduce maximum risk to a minimum. Using the example of corn purchases, we carried out a comparative analysis of possible methods for determining these intervals based on an analysis of price time series. The findings are useful for managers of processing enterprises. This work is the first to solve the problem of minimizing the maximum risk when purchasing raw materials.