Journal article

Contracting Mechanisms for Stable Sourcing Networks

Jennifer Ryan, Lusheng Shao, Daewon Sun

Manufacturing and Service Operations Management | Institute for Operations Research and Management Sciences | Published : 2021

Abstract

Problem definition: We study profit allocation for a sourcing network in which a buyer sources from a set of differentiated suppliers with limited capacity under uncertain demand for the final product. While the buyer takes the lead in forming the sourcing network and designing the contract mechanism, due to their substantial bargaining power, the suppliers take the lead in determining the terms of the contract. Academic/Practical Relevance: We identify contracting mechanisms that will ensure the stability of the sourcing network in the long term, where a stable sourcing network requires an effective profit allocation scheme that motivates all members to join and stay in the network. Met..

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University of Melbourne Researchers