Krishna,
It's subjective to the architecture decision which your company will take -
If you have already invested in a 3rd party tool which can convert the EDI 850 and create the required orders then option 1 should be going with the 3rd party tool.
If you have the SAP PI latest version and EDI add-on, then you can weigh the option based on the roadmap of your organization with respect to B2B integration.
Cheers,
Sunil.