Professor Wei Xing recently published a research article titled “Operational Hedging or Financial Hedging? Strategic Risk Management in Commodity Procurement” in Production and Operations Management (POM), a top-tier journal in the field of management science. The paper was co-authored with Professors Xuan Zhao (Wilfrid Laurier University), Liming Liu (Southern University of Science and Technology), and Shanshan Ma (Shanghai Lixin University of Accounting and Finance). Professor Wei Xing is the first author, and China University of Petroleum (East China) is the first affiliated institution.
The study examines how firms manage demand volatility through strategic use of operational flexibility and financial hedging. Using game-theoretic modeling, the research analyzes equilibrium risk management strategies in a supply chain comprising an upstream supplier and two competing downstream manufacturers. The paper identifies conditions under which firms adopt either individual or combined hedging strategies, revealing that operational and financial hedging are often complementary. However, their combined application may not always outperform a single financial hedging strategy.
This work offers theoretical insights into the interplay between spot trading and financial hedging in commodity procurement, highlighting how competition shapes risk management decisions. The study contributes to the broader literature on supply chain risk management under uncertainty.
Production and Operations Management is included in the UTD24 and FT50 journal lists, and is widely recognized as a leading academic journal in the management field. This marks the second publication by the School of Economics and Management in a UTD24-listed journal, signifying further progress in the School’s research in operations management.
Original article:https://onlinelibrary.wiley.com/doi/10.1111/poms.13748
