Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/34221
Title: Outsourcing structures and information flow in a three-tier supply chain
Authors: Guo, P
Song, JS
Wang, Y 
Keywords: Consignment
Information asymmetry
Outsourcing
Turnkey
Issue Date: 2010
Publisher: Elsevier
Source: International journal of production economics, 2010, v. 128, no. 1, p. 175-187 How to cite?
Journal: International journal of production economics 
Abstract: 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.
Description: This Special Issue is devoted to publishing a selection of the latest research papers related to the global supply chain integration theme that were first presented at the 13th International Symposium on Logistics (ISL) held on July 6–8, 2008, in Bangkok, Thailand.
URI: http://hdl.handle.net/10397/34221
ISSN: 0925-5273
DOI: 10.1016/j.ijpe.2010.06.017
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