Procurement mechanism design in a two-echelon inventory system with price-sensitive demand

Manufacturing and Service Operations Management

Volumn 12, Issue 4, 2010, Pages 608-626

  Zhang, Fuqiang ^a  

^a WASHINGTON UNIVERSITY IN ST LOUIS   (United States)

Author keywords

Asymmetric information; Inventory models; Mechanism design; Procurement; Supply contracts

Indexed keywords

EID: 78149336347     PISSN: 15234614     EISSN: 15265498     Source Type: Journal    
DOI: 10.1287/msom.1090.0287     Document Type: Article

References (50)

1. Axs?er, S., K. Rosling. 1993. Notes: Installation vs. echelon stock policies formultilevel inventory control. Management Sci. 39(10) 1274-1280.
2. Bagnoli, M., T. Bergstrom. 2005. Log-concave probability and its applications. Econom. Theory 26(2) 445-469.
3. Bhattacharyya, S., F. Lafontaine. 1995. Double-sided moral hazard and the nature of shared contracts. RAND J. Econom. 26(4) 761-781.
4. Bolandifar, E., T. Feng, F. Zhang. 2010. Asymmetric information and enforcement in supply contract design. Working paper, Washington University in St. Louis, St. Louis.
5. Bower, A. G. 1993. Procurement policy and contracting efficiency. Internat. Econom. Rev. 34(4) 873-901.
6. Branco, F. 1997. The design of multidimensional auctions. RAND J. Econom. 28(1) 63-81.
7. Cachon, G. P. 2003. Supply chain coordination with contracts. S. Graves, T. de Kok, eds. Handbooks in Operations Research and Management Science. ElsevierB.V ., Amsterdam.
8. Cachon, G. P., F. Zhang. 2006. Procuring fast delivery: Solesourcing with information asymmetry. Management Sci. 52(6) 881-896.
9. Cachon, G. P., P. H. Zipkin. 1999. Competitive and cooperative inventory policies in a two-stage supply chain. Management Sci. 45(7) 936-953.
10. Cavinato, J. 1994. Sourcing and supplier management. J. Robeson, W. Capacino, eds. The Logistics Handbook. Macmillan, Inc., New York.
11. Che, Y.-K. 1993. Design competition through multi-dimensional auctions. RAND J. Econom. 24(4) 668-680.
12. Chen, F. 2007. Auctioning supply contracts. Management Sci. 53(10) 1562-1576.
13. Chen, F., Y.-S. Zheng. 1994. Lowerbounds formultiechelon stochastic inventory systems. Management Sci. 40(11) 1426-1443.
14. Choi, K.-S., J. G. Dai, J.-S. Song. 2004. On measuring supplier performance under vendor-managed-inventory programs in capacitated supply chains. Manufacturing Service Oper. Management 6(1) 53-72.
15. Chu, L. Y., D. E. M. Sappington. 2007. Simple cost-sharing contracts. Amer. Econom. Rev. 97(2) 419-428.
16. Clark, A. J., H. Scarf. 1960. Optimal policies for a multiechelon inventory problem. Management Sci. 6(4) 475-490.
17. Corbett, C. J. 2001. Stochastic inventory systems in a supply chain with asymmetric information: Cycle stocks, safety stocks, and consignment stock. Oper. Res. 49(4) 487-500.
18. Corbett, C. J., X. de Groote. 2000. A supplier's optimal quantity discount policy underasymmetr ic information. Management Sci. 46(3) 444-450.
19. Corbett, C. J., C. S. Tang. 1998. Designing supply contracts: Contract type and information asymmetry. S. Tayur, R. Ganeshan, M. Magazine, eds. Quantitative Models for Supply Chain Management, Chapter9. KluwerAcademic Publishers, New York.
20. Corbett, C. J., D. Zhou, C. S. Tang. 2004. Designing supply contracts: Contract type and information asymmetry. Management Sci. 50(4) 550-559.
21. Cripps, M., N. Ireland. 1994. The design of auctions and tenders with quality thresholds: The symmetric case. Econom. J. 104 316-326.
22. Dasgupta, S., D. F. Spulber. 1990. Managing procurement auctions. Inform. Econom. Policy 4(1) 5-29.
23. Elmaghraby, W. J. 2000. Supply contract competition and sourcing strategies. Manufacturing Service Oper. Management 2(4) 350-371.
24. Elmaghraby, W. J. 2004. Auctions and pricing in e-markeplaces. D. Simchi-Levi, S. D. Wu, Z.-J. Shen, eds. Handbook of Quantitative Supply Chain Analysis: Modeling in the E-Business Era, Chapter6. KluwerAcademic Publishers, New York.
25. Farlow, D., G. Schmidt, A. Tsay. 1996. Supplier management at Sun Microsystems (A). Stanford Business School Case, Stanford, CA.
26. Federgruen, A., A. Heching. 1999. Combined pricing and inventory control under uncertainty. Oper. Res. 47(3) 454-475.
27. Federgruen, A., P. H. Zipkin. 1984. Computational issues in an infinite horizon, multiechelon inventory model. Oper. Res. 32(4) 818-836.
28. Ha, A. Y. 2001. Supplier-buyer contracting: Asymmetric cost information and cutoff level policy forbuyerpar ticipation. Naval Res. Logist. 48 41-64.
29. Holmstrom, B., P. Milgrom. 1987. Aggregation and linearity in the provision of intertemporal incentives. Econometrica 55(2) 303-328.
30. Jeuland, A. P., S. M. Shugan. 1983. Managing channel profits. Marketing Sci. 2(3) 239-272.
31. Katok, E., D. Thomas, A. Davis. 2008. Inventory service-level agreements as coordination mechanisms: The effect of review periods. Manufacturing Service Oper. Management 10(4) 609-624.
32. Kay, E. 2005. Ways to measure supplier performance. http://www .purchasing.com/
33. Kayiş, E., F. Erhun, E. L. Plambeck. 2007. Delegation vs. control of component procurement. Working paper, Stanford University, Stanford, CA.
34. Klemperer, P. 1999. Auction theory: A guide to the literature. J. Econom. Surveys 13(3) 227-286.
35. Laffont, J. J., J. Tirole. 1987. Auctioning incentive contracts. J. Political Econom. 95(5) 921-937.
36. Laseter, T. 1998. Balancing Sourcing: Cooperation and Competition in Supplier Relationships. Jossey-Bass Publishers, San Francisco.
37. Lau, A. H. L., H.-S. Lau, J.-C. Wang. 2008. How a dominant retailer might design a purchase contract for a newsvendortype product with price-sensitive demand. Eur. J. Oper. Res. 190(2) 443-458.
38. Lee, H. L., M. J. Rosenblatt. 1986. A generalized quantity discount pricing model to increase supplier's profits. Management Sci. 32(9) 1177-1185.
39. Li, C., A. Scheller-Wolf. 2008. Push or pull: Auctioning supply contracts. Production Oper. Management. Forthcoming.
40. Rangan, V. K. 1998. FreeMarkets online. Harvard Business School Case 9-598-1109, Boston.
41. Ray, S., S. Li, Y. Song. 2005. Tailored supply chain decision making under price-sensitive stochastic demand and delivery uncertainty. Management Sci. 51(12) 1873-1891.
42. Rogerson, W. P. 2003. Simple menu of contracts in cost-based procurement and regulation. Amer. Econom. Rev. 93(3) 919-926.
43. Salanie, B. 1997. The Economics of Contracts. MIT Press, Cambridge, MA.
44. Shang, K. H., J.-S. Song. 2006. A closed-form approximation for serial inventory systems and its application to system design. Manufacturing Service Oper. Management 8(4) 394-406.
45. Taylor, T. A., E. L. Plambeck. 2007. Simple relational contracts to motivate capacity investment: Price-only versus priceand- quantity. Manufacturing Service Oper. Management 9(1) 94-113.
46. Thomas, D. J. 2005. Measuring item fill-rate performance in a finite horizon. Manufacturing Service Oper. Management 7(1) 74-80.
47. Thonemann, U., K. Behrenbeck, J. Küper, K. H. Magnus. 2005. Supply Chain Excellence im Handel-in German-. Financial Times Deutschland/Gabler, Wiesbaden, Germany.
48. Tunca, T., Q. Wu. 2009. Multiple sourcing and procurement process selection with bidding events. Management Sci. 55(5) 763-780.
49. U.S. Department of Commerce. 2006. Statistics for industry groups and industries: Annual survey of manufactures. http://www .census.gov/prod/2006pubs/ am0531gs1.pdf.
50. Zheng, C. Z. 2000. Optimal auction in a multidimensional world. Working paper, Northwestern University, Evanston, IL.