Effective contracts in supply chains

In the past decade, we have seen significant increase in the level of outsourcing in many industries. This increase in the level of outsourcing increases the importance of implementing effective contracts in supply chains. In this thesis, we study several issues in supply chain contracts. In the first part of the thesis, we study the impact of effort in a supply chain with multiple retailers. The costly effort engaged by a retailer may increase or decrease the demands of other retailers. However, effort is usually not verifiable and hence not contractible. Based on the impact of a retailer's effort on its own and other retailers' revenue, we classify each retailer into different categories. According to the corresponding categories of all retailers, we identify coordinating contracts and general classes of contracts that cannot coordinate. Second, we study the stability of coordinating contracts in supply chains. We illustrate that, due to competition, not all coordinating contracts are achievable. Thus, we introduce the notion of rational contracts, which reflects the agents "bargaining power". We propose a general framework for coordinating and rational contracts. Using this framework, we analyze two supply chains, a supply chain with multiple suppliers and single retailer, and a supply chain with a single supplier and price-competing retailers.

Department dc:contributor.department

Massachusetts Institute of Technology. Operations Research Center.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Author dc:creator

• Shum, Wanhang

Advisor dc:contributor.advisor

• David Simchi-Levi.

• Operations Research Center.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/40385

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/40385