Services outsourcing under asymmetric cost information

B. Mahadevan, Jishnu Hazra and Tarun Jain

European Journal of Operational Research, 2017, vol. 257, issue 2, 456-467

Abstract: In this paper, we investigate the impact of cost heterogeneity on the optimal sourcing strategy of a client firm that outsources her service requirements to a set of outside vendors/service providers. We analyze a typical situation involving service providers, who differ from one another with respect to the marginal cost and characterize the firm’s optimal size of vendor network. In our model, the client firm does not have complete information about the vendors’ cost structure.

Keywords: Decision processes; Capacity reservation; Bidding; Asymmetric cost information (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:257:y:2017:i:2:p:456-467

DOI: 10.1016/j.ejor.2016.07.020

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