Match!

Outsourcing contracts and ordering decisions of a supply chain under multi-dimensional uncertainties

Published on Apr 1, 2019in Computers & Industrial Engineering3.518
· DOI :10.1016/j.cie.2019.02.010
Kebing Chen3
Estimated H-index: 3
(NUAA: Nanjing University of Aeronautics and Astronautics),
Hongmei Zhao1
Estimated H-index: 1
(NUAA: Nanjing University of Aeronautics and Astronautics),
Tiaojun Xiao20
Estimated H-index: 20
(Nanjing University of Finance and Economics)
Source
Abstract
Abstract We consider a supply chain in which a manufacturer with random yield sells the product through a retailer, where the overflowed order of the retailer may be fulfilled by the manufacturer’s outsourcing product. The inherent uncertainties include demand uncertainty, yield uncertainty, and outsourcing information asymmetry. Two contingent outsourcing contracts are studied based on whether the delivery lead-time quotation is adopted or not. We study how the two outsourcing contracts affect supply chain decision-makings and profits by introducing a backup supplier with private cost information. By employing backward induction technique, we obtain a closed-form analytical solution for backup supplier selection and ordering decisions. The manufacturer can outsource the retailer’s overflowed order to a backup supplier when the actual yield is low. In the presence of multi-dimensional uncertainties, there exists robustness for both outsourcing contracts. Depending on both the yield and the backup supplier’s cost type, the manufacturer makes one of three choices to outsource production: choosing both types of the backup supplier, choosing only the low-cost backup supplier, or choosing neither. The outsourcing quantity may be a part or all of the retailer’s overflowed order. Unlike the contract without constraint on lead-time, the quotation of the delivery lead-time endows the manufacturer with the ability of revealing the true cost information, thus it can improve the manufacturer’s outsourcing profit. However, the quotation of delivery lead-time may make the whole supply chain less efficient.
  • References (43)
  • Citations (1)
📖 Papers frequently viewed together
2008
4 Authors (朱珠, ..., 郭海峰)
20194.10IEEE Access
2 Authors (Nengmin Zeng, Qing He)
11 Citations
78% of Scinapse members use related papers. After signing in, all features are FREE.
References43
Newest
#1Yunlong Yu (NU: Nanjing University)H-Index: 1
#2Tiaojun Xiao (Nanjing University of Finance and Economics)H-Index: 1
Consider an agri-product supply chain with logistics outsourcing, facing quantity/quality loss.We study and compare price and service decisions and profits under two channel leadership scenarios.Service sensitivity changes the effect of channel leadership on the cold-chain service level.The logistics provider-first scenario is beneficial to all players for low service sensitivity.Endogenization of service price may change the relative profit of the supplier to the retailer. This paper develops t...
15 CitationsSource
#1Stefan Minner (TUM: Technische Universität München)H-Index: 27
#2Sandra Transchel (Kühne Logistics University)H-Index: 10
Empirical research has shown that the degree of order variability in supply chains is significantly influenced by product- and industry-specific factors. This paper analyzes the impact of perishability on order variability and the bullwhip effect in supply chains. We decompose the ordering process of a retailer into a sales and an outdating process and quantify their short- and long-term variability and correlation. We find differences to non-perishable product supply chains driven by the impact...
13 CitationsSource
#1B. Mahadevan (IIMB: Indian Institute of Management Bangalore)H-Index: 13
#2Jishnu Hazra (IIMB: Indian Institute of Management Bangalore)H-Index: 6
Last. Tarun Jain (IIMB: Indian Institute of Management Bangalore)H-Index: 6
view all 3 authors...
In this paper, we investigate the impact of cost heterogeneity on the optimal sourcing strategy of a client firm that outsources her service requirements to a set of outside vendors/service providers. We analyze a typical situation involving service providers, who differ from one another with respect to the marginal cost and characterize the firm’s optimal size of vendor network. In our model, the client firm does not have complete information about the vendors’ cost structure.
10 CitationsSource
#1Bibhas C. Giri (Jadavpur University)H-Index: 23
#2Bhaba R. Sarker (LSU: Louisiana State University)H-Index: 37
Supply chain with a manufacturer, a TPLSP and multiple retailers is considered.Buyback and revenue sharing contracts are implemented.Effect of production disruption at the source on the optimal decisions is investigated.Associated contract parameters are designed so as to coordinate the supply chain.Effects of contracts tend to emerge indifferent for relatively high probability of disruption. Third Party Logistics (TPL) is playing a significant role in today's supply chain management. Business o...
23 CitationsSource
#1Kebing Chen (NUAA: Nanjing University of Aeronautics and Astronautics)H-Index: 1
#2Renxing Xu (NUAA: Nanjing University of Aeronautics and Astronautics)H-Index: 1
Last. Hanwei Fang (WIT: Wuhan Institute of Technology)H-Index: 1
view all 3 authors...
This paper develops the game models of two symmetric supply chains, each consisting of one manufacturer and one retailer, while both retailers compete in the market with a linear function. The disclosure mechanism is designed when the information of the disrupted demand is asymmetric between supply side and retail side. We first study the model with the full information as a benchmark to explore the effect of asymmetric information on the system. In the case, each manufacturer maximizes her prof...
1 CitationsSource
#1Yongjian Li (NKU: Nankai University)H-Index: 32
#2Xueping Zhen (Shanghai Maritime University)H-Index: 3
Last. Gangshu (George) Cai (Santa Clara University)H-Index: 13
view all 4 authors...
In a supply chain, when the supply is hit by an unexpected disruption, the supplier may face certain financial difficulty to resume normal production, causing a supply shortage as well as a loss to the manufacturer and the entire supply chain. Combining a penalty term in writing contracts with the provision of financial assistance is the “carrot and stick” approach used by a manufacturer to deal with supply disruption. This article investigates how the manufacturer, in a better financial situati...
14 CitationsSource
#1Bin Shen (Donghua University)H-Index: 16
#2Qingying Li (Donghua University)H-Index: 5
Last. Vincent Quan (Fashion Institute of Technology)H-Index: 1
view all 4 authors...
Design innovation is the engine of fashion. Many fashion firms outsource design innovation to their suppliers. Design outsourcing is on the rise in the fashion supply chain, but research in this area lags behind industry practice. In this paper, we examine how design outsourcing affects the supply chain, and we compare supply chain performance under an Original Equipment Manufacturer (OEM) strategy versus an Original Design Manufacturer (ODM) strategy. We evaluate a market size outsourcing model...
17 CitationsSource
#1Dimitris Zissis (OPA: Athens University of Economics and Business)H-Index: 1
#2George Ioannou (OPA: Athens University of Economics and Business)H-Index: 26
Last. Apostolos Burnetas (UoA: National and Kapodistrian University of Athens)H-Index: 17
view all 3 authors...
We consider a two node supply chain with a rational manufacturer–retailer pair, in which the retailer has private information that affects the nodes׳ reservation levels. Quantity discounts offered by the manufacturer is the mechanism we propose in order to achieve reduced costs for both supply chain nodes. We derive analytical expressions of the quantity discounts that minimize the manufacturer׳s costs, while enabling the establishment of the business. Furthermore, we show that perfect coordinat...
37 CitationsSource
#1Sammi Y. Tang (UM: University of Miami)H-Index: 5
#2Panos Kouvelis (WashU: Washington University in St. Louis)H-Index: 26
We consider coordination issues in supply chains where supplier's production process is subject to random yield losses. For a simple supply chain with a single supplier and retailer facing deterministic demand, a pay back contract which has the retailer paying a discount price for the supplier's excess units can provide the right incentive for the supplier to increase his production size and achieve coordination. Building upon this result, we consider coordination issues for two other supply cha...
29 CitationsSource
#1Anna Nagurney (UMass: University of Massachusetts Amherst)H-Index: 51
#2Dong Li (UMass: University of Massachusetts Amherst)H-Index: 7
Last. Ladimer S. Nagurney (UHart: University of Hartford)H-Index: 10
view all 3 authors...
A spatial price equilibrium model with information asymmetry in quality is developed in both static and dynamic versions. Producers at the supply markets are aware of the quality of their products, whereas consumers, located at the demand markets, are aware only of the average quality of the products that are shipped to their demand markets. Minimum quality standards are also captured in order to assess the impacts of such policy interventions. We establish qualitative results, in the form of ex...
12 CitationsSource
Cited By1
Newest
#1Lei Xie (College of Management and Economics)
#2Junhai Ma (College of Management and Economics)H-Index: 17
Last. Mark Goh (NUS: National University of Singapore)H-Index: 31
view all 3 authors...
Source
In order to improve green performance and achieve sustainability goals, food companies see the need to adopt green supply chain management. However, ensuring a green supply is a tough task since food companies do not always have full information of their suppliers’ efforts in improving their green performance. This information asymmetry issue will lead the food producers to make poor decisions and cause a profit loss. Therefore, to fill this research gap, this study investigates a two-stage supp...
1 CitationsSource
#1Mansoor ShekarianH-Index: 1
Last. Mahour Mellat Parast (ASU: Arizona State University)H-Index: 12
view all 3 authors...
Abstract This paper examines the effect of flexibility and agility on improving supply chain responsiveness. We examine a supply chain with multiple sites, multiple transportation channels, and multiple product planning, over multiple periods, under supply risk and demand risk. Using a numerical example, we determine the relationship between three objective functions related to responsiveness, risk, and the cost of new and seasonal products, then discuss the impact of flexibility and agility on ...
Source
This paper reports a case study of an Indian aerospace industry, XYZ Aeronautics Limited, with an objective to bring reduction in cycle time of outsourcing process. The focus is to identify bottleneck areas and investigate into the improvement opportunities. The paper enriches the present body of knowledge by contributing a methodology and its application for a real-life case study to understand the implications of outsourcing on operational planning. The analysis reported in this research is ba...
Source
In a high-tech backend semiconductor business where a market environment changes sharply and requires competitiveness of high technology, one of the most important criteria is to establish an optimal strategy for outsourcing development so a firm can achieve a sustainable competitive advantage. Many studies have investigated sustainable and successful strategies for the selection and management of outsourcing suppliers, whereas, this study focuses mainly on analyzing the most affecting factor fo...
Source
ABSTRACTWith increasing global exposure, organisations have started to witness supply chain risks that they traditionally were not exposed to. This article therefore attempts to answer the research...
Source