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Outsourcing structures and information flow in a three-tier supply chain

Publication ,  Journal Article
Guo, P; Song, JS; Wang, Y
Published in: International Journal of Production Economics
November 1, 2010

We consider a three-tier supply chain consisting of an original equipment manufacturer (OEM), a contract manufacturer (CM) and a supplier. We analyze and compare three outsourcing structures that are currently implemented by top-tier OEMs: (1) inhouse consignment, under which the OEM signs independent contracts with the CM and the supplier; (2) turnkey with integration, under which the OEM contracts with an alliance of the CM and the supplier; and (3) turnkey, under which the OEM contracts with the CM, and the CM then subcontracts with the supplier. The OEM is a Stackelberg leader who decides how much of the end product to produce. All parties use take-it-or-leave-it wholesale-price contracts. Both the CM and the supplier have private information about their own production costs. The OEM has prior information about these costs, but this prior information depends on the specific outsourcing structure. Each party's optimal decision is characterized. We then compare each party's profits across the three outsourcing structures and identify which benefits and when. © 2010 Elsevier B.V.All rights reserved.

Duke Scholars

Published In

International Journal of Production Economics

DOI

ISSN

0925-5273

Publication Date

November 1, 2010

Volume

128

Issue

1

Start / End Page

175 / 187

Related Subject Headings

  • Operations Research
 

Citation

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Guo, P., Song, J. S., & Wang, Y. (2010). Outsourcing structures and information flow in a three-tier supply chain. International Journal of Production Economics, 128(1), 175–187. https://doi.org/10.1016/j.ijpe.2010.06.017
Guo, P., J. S. Song, and Y. Wang. “Outsourcing structures and information flow in a three-tier supply chain.” International Journal of Production Economics 128, no. 1 (November 1, 2010): 175–87. https://doi.org/10.1016/j.ijpe.2010.06.017.
Guo P, Song JS, Wang Y. Outsourcing structures and information flow in a three-tier supply chain. International Journal of Production Economics. 2010 Nov 1;128(1):175–87.
Guo, P., et al. “Outsourcing structures and information flow in a three-tier supply chain.” International Journal of Production Economics, vol. 128, no. 1, Nov. 2010, pp. 175–87. Scopus, doi:10.1016/j.ijpe.2010.06.017.
Guo P, Song JS, Wang Y. Outsourcing structures and information flow in a three-tier supply chain. International Journal of Production Economics. 2010 Nov 1;128(1):175–187.
Journal cover image

Published In

International Journal of Production Economics

DOI

ISSN

0925-5273

Publication Date

November 1, 2010

Volume

128

Issue

1

Start / End Page

175 / 187

Related Subject Headings

  • Operations Research