Supplier’s opportunistic behavior and the quality-efficiency tradeoff with conventional supply chain contracts

This paper presents a supply chain game with a manufacturer and its supplier, where the firms agree on a linear contract where the supplier either periodically updates the transfer price, i.e., cost-plus contract (CPC), or sets a definitive transfer price at the beginning of the contract, i.e., wholesale price contract (WPC). Assuming a committed manufacturer, we account for the possibility that the supplier is either committed or non-committed, and derive homogeneous and heterogeneous Nash equilibrium strategies under a CPC and a WPC. Link to the article

EL OUARDIGHI, F. and SCHAIDERMAN, M. (2019). Supplier’s opportunistic behavior and the quality-efficiency tradeoff with conventional supply chain contracts. Journal of the Operational Research Society, 70(11), pp. 1915-1937.

Keywords : #cost, #reducing-R&D, #design-quality, #linear-contract, #ssupply-chain-management