 Outsourcing vs. in-house production: a comparison of supply chain contracts with effort dependent demandOnur Kaya Omega, 2011, vol. 39, issue 2, 168-178 Abstract: We analyze the effort and pricing decisions in a two facility supply chain in which one of the parties can exert costly effort to increase demand. We consider an outsourcing model in which the supplier makes the effort decision and an in-house production model in which the manufacturer decides on the effort level and we compare these two models with each other. We analyze and compare several contracts for decentralized supply chain models and we aim to find which contracts are best to use in different cases. We find the optimal contract parameters in each case and perform extensive computational testing to compare the efficiencies of these contracts. We also analyze the effect of the powers of the parties in the system and the effect of system parameters on the performances of the contracts and on the optimal values of the model variables such as price, effort and demand. Keywords: Supply; chain; management; Contracts; Outsourcing; Effort; Incentive (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:39:y:2011:i:2:p:168-178 Ordering information: This journal article can be ordered from Access Statistics for this article Omega is currently edited by B. Lev More articles in Omega from Elsevier |
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