Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/32078
Title: Subcontracting price schemes for order acceptance and scheduling
Authors: Wang, X
Zhu, Q
Cheng, TCE 
Keywords: Order acceptance
Profit
Scheduling
Subcontracting
Issue Date: 2015
Publisher: Pergamon Press
Source: Omega, 2015, v. 54, p. 1-10 How to cite?
Journal: Omega 
Abstract: In this paper we study subcontracting price schemes between a subcontractor and a firm that are engaged in subcontracting of heterogeneous orders with distinct due dates, revenues, and processing times. We assume that the subcontractor proposes the subcontracting pricing and the firm follows by determining the subcontracted orders by solving its order acceptance and scheduling problem. When the subcontractor adopts a linear pricing scheme, we find the firm's optimal decisions and develop an algorithm to derive the subcontractor's own optimal pricing. We then design a fixed pricing with transfer payment scheme and a quantity discount pricing scheme to coordinate the firm's and subcontractor's decisions. We examine if the subcontractor can make a higher profit using either of these schemes than the linear pricing scheme, and if they will induce the firm to make decisions that lead to system-wide optimal outcomes.
URI: http://hdl.handle.net/10397/32078
ISSN: 0305-0483
EISSN: 1873-5274
DOI: 10.1016/j.omega.2015.01.005
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