Optimal sourcing orders under supply disruptions and the strategic use of buffer suppliers

Arbeitspapier

This paper analyses procurement from two, risk-averse, suppliers who are responsible for the timely delivery of some inputs. Their production is subject to inherent disruptions. We characterize the optimal contracts when suppliers can invest to lower the risk of delays that are costly to the manufacturer. When investment is contractible, we show that issuing asymmetric contracts, whereby the buyer is more heavily dependent on one supplier, is optimal as the cost associated with supply disruptions increases. When investment is not contractible, we show that large orders can be used as an incentive devise. Thus, the strategy consisting of selecting one supplier as a main producer and another as a buffer has further desirable advantages under moral hazard.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: UCD Centre for Economic Research Working Paper Series ; No. WP14/17

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Economics of Contract: Theory ; Contracting Out; Joint Ventures; Technology Licensing
• Thema: Investment ; Risk ; Costly Delays ; Order Size and Moral Hazard

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Parlane, Sarah ; Tsai, Ying-Yi
• Ereignis: Veröffentlichung
• (wer): University College Dublin, UCD School of Economics
• (wo): Dublin
• (wann): 2014

Weitere Informationen

• Handle: http://hdl.handle.net/10419/109710
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ