We study hedging cash flow risks in a supply chain where firms invest internal funds to improve production efficiencies. We offer a decomposition framework to capture the cost reduction and flexibility effect of hedging. It allows us to understand how a firm's hedging choice depends on its...

We study a risk-averse newsvendor problem where demand distribution is unknown. The focal product is new, and only the historical demand information of related products is available. The newsvendor aims to maximize its expected profit subject to a profit risk constraint. We develop a model with...