Group Warranty Contracts to Coordinate Assembly Supply Chains With Nontestable Components

Author:

Duenyas Izak1ORCID,Iravani Seyed MR2,Li Linlin2,Najafi Sajjad3

Affiliation:

1. Stephen M. Ross School of Business, University of Michigan, Ann Arbor, MI, USA

2. Department of Industrial Engineering and Management Sciences, Northwestern University, Evanston, IL, USA

3. Department of Information Systems and Operations Management, HEC Paris, Jouy-en-Josas, France

Abstract

We consider a supply chain where multiple suppliers and a manufacturer contribute to the assembly of a product (through providing components or labor). The product fails if any of its components (or elements of work) fails, but finding the faulty component can be prohibitively difficult. We study group warranty contracts for the manufacturer to induce suppliers to improve their quality levels. When information is symmetric and the manufacturer can contract on his own quality level, we show that a group warranty contract can achieve the first-best outcome. When the manufacturer’s quality level is not contractible, we show that the manufacturer and all the suppliers under-invest in qualities. We then extend our model to the asymmetric information case where suppliers have private quality cost information. Further, we consider whether the manufacturer benefits from sourcing multiple components from a single supplier, that is, supply consolidation. We find that supply consolidation benefits the manufacturer when his quality level is not contractible, but hurts him in the presence of asymmetric quality cost information of the suppliers.

Publisher

SAGE Publications

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3