Product recall has been a widespread practical operation risk in the production outsourcing. To remit even avoid product recall risk, this paper considers a two-echelon supply chain where the original equipment manufacturer (OEM) orders a critical component from one or two contract manufacturers (CMs) and uses it to produce finished product with potential quality defect. The CMs can decide investment level to reduce defect possibility and share recall loss with the OEM once product recall is implemented. When the recall loss sharing rate is fixed, the OEM may adopt the single sourcing strategy or the dual sourcing strategy which depends on the recall loss sharing rate. Moreover, if the sharing rate is relatively small, the single sourcing strategy is an optimal choice for the OEM. However, when the recall loss sharing rate is determined by the OEM, she prefers to adopt the dual sourcing strategy. Meanwhile, an increase of the recall loss sharing rate may not force the CM to improve product quality. By the numerical analysis, if the marginal recall loss is large or the wholesale price is relatively small, the OEM and the CMs can reach a win-win scenario. Finally, we examine an extension in which the CMs have pricing ability on wholesale price, and the result shows that the OEM can not obtain a cost-reduction benefit under the dual sourcing strategy.
Accepté le :
Première publication :
Publié le :
DOI : 10.1051/ro/2019053
Mots-clés : Recall loss sharing, quality investment, dual sourcing, contract manufacturing, game theory
@article{RO_2020__54_4_1133_0,
author = {Dong, Binwei and Tang, Wansheng and Zhou, Chi},
title = {Strategic sourcing under recall loss sharing and product quality investment},
journal = {RAIRO - Operations Research - Recherche Op\'erationnelle},
pages = {1133--1160},
publisher = {EDP-Sciences},
volume = {54},
number = {4},
year = {2020},
doi = {10.1051/ro/2019053},
mrnumber = {4109815},
language = {en},
url = {http://archive.numdam.org/articles/10.1051/ro/2019053/}
}
TY - JOUR AU - Dong, Binwei AU - Tang, Wansheng AU - Zhou, Chi TI - Strategic sourcing under recall loss sharing and product quality investment JO - RAIRO - Operations Research - Recherche Opérationnelle PY - 2020 SP - 1133 EP - 1160 VL - 54 IS - 4 PB - EDP-Sciences UR - http://archive.numdam.org/articles/10.1051/ro/2019053/ DO - 10.1051/ro/2019053 LA - en ID - RO_2020__54_4_1133_0 ER -
%0 Journal Article %A Dong, Binwei %A Tang, Wansheng %A Zhou, Chi %T Strategic sourcing under recall loss sharing and product quality investment %J RAIRO - Operations Research - Recherche Opérationnelle %D 2020 %P 1133-1160 %V 54 %N 4 %I EDP-Sciences %U http://archive.numdam.org/articles/10.1051/ro/2019053/ %R 10.1051/ro/2019053 %G en %F RO_2020__54_4_1133_0
Dong, Binwei; Tang, Wansheng; Zhou, Chi. Strategic sourcing under recall loss sharing and product quality investment. RAIRO - Operations Research - Recherche Opérationnelle, Tome 54 (2020) no. 4, pp. 1133-1160. doi : 10.1051/ro/2019053. http://archive.numdam.org/articles/10.1051/ro/2019053/
[1] Antigua Observer Newspaper, Samsung says phone explosions in China not caused by batteries. https://antiguaobserver.com/samsung-says-phone-explosions-in-china-not-caused-by-batteries/, Sep 19 (Accessed on Sep 20, 2018).
[2] , and , Delegation vs. control in supply chain procurement under competition. Prod. Oper. Manage. 25 (2016) 1528–1541. | DOI
[3] , and , Single versus multiple supplier sourcing strategies. Eur. J. Oper. Res. 182 (2007) 95–112. | DOI | Zbl
[4] , and , Sourcing decisions with stochastic supplier reliability and stochastic demand. Prod. Oper. Manage. 18 (2009) 475–484. | DOI
[5] and , Competition and outsourcing with scale economies. Manage. Sci. 48 (2002) 1314–1333. | DOI | Zbl
[6] , and , Quality improvement incentives and product recall cost sharing contracts. Manage. Sci. 55 (2009) 1122–1138. | DOI | Zbl
[7] and , Strategic outsourcing under technology spillovers. Naval Res. Logist. (NRL) 61 (2014) 501–514. | DOI | MR
[8] and , Strategic sourcing in the presence of uncertain supply and retail competition. Prod. Oper. Manage. 23 (2014) 1748–1760. | DOI
[9] , and , Should an OEM retain component procurement when the CM produces competing products?. Prod. Oper. Manage. 21 (2012) 907–922. | DOI
[10] , , and , Personalized pricing and quality differentiation. Manage. Sci. 51 (2005) 1120–1130. | DOI
[11] , and , Strategic procurement outsourcing with asymmetric cost information under scale economies. J. Oper. Res. Soc. 69 (2018) 1751–1772. | DOI
[12] , and , Managerial flexibility strategies under supply and demand risks: Quantity postponement vs. price postponement. Int. J. Mach. Learn. Cybern. (2018) 1–17.
[13] , , and , Quality management in multi-Level supply chains with outsourced manufacturing. Prod. Oper. Manage. 25 (2016) 290–305. | DOI
[14] , Supply quality management with optimal wholesale price and revenue sharing contracts: a two-stage game approach. Int. J. Prod. Econ. 156 (2014) 260–268. | DOI
[15] , Apple Pressing LG to Add OLED Display Production for 2018 iPhone, Limiting Samsung’s Leverage. Available at: https://www.macrumors.com/2017/07/30/kuo-lg-gis-oled-2018-iphone/ (2020).
[16] , and , Strategic outsourcing for competing OEMs that face cost reduction opportunities. IEEE Trans. 38 (2006) 903–915. | DOI
[17] , Single sourcing versus dual sourcing under conditions of learning. Comput. Ind. Eng. 62 (2012) 318–328. | DOI
[18] and , Managing quality in outsourced production: Construct development and measurement validation. Qual. Manage. J. 18 (2011) 26–45. | DOI
[19] , and , The comparison of two procurement strategies in the presence of supply disruption. Comput. Ind. Eng. 85 (2015) 296–305. | DOI
[20] , Single versus multiple sourcing and the evolution of bargaining positions. Omega-Int. J. Manage. Sci. 54 (2015) 125–133. | DOI
[21] and , Reliability improvement and production decision under Cournot competition. Int. J. Prod. Res. 53 (2015) 4754–4768. | DOI
[22] , and , Procurement mechanism for dual sourcing and emergency production under capacity constraint. Comput. Ind. Eng. 119 (2018) 204–218. | DOI
[23] and , Dual sourcing under suppliers’ capacity investments. Int. J. Prod. Econ. 183 (2017) 103–115. | DOI
[24] , and , Delegation vs. control of component procurement under asymmetric cost information and simple contracts. Manuf. Serv. Oper. Manage. 15 (2013) 45–56. | DOI
[25] , and , Pricing and sourcing strategies for competing retailers in supply chains under disruption risk, Eur. J. Oper. Res. 265 (2018) 533–543. | DOI | MR | Zbl
[26] , , Sourcing for Quality: Pricing, Inspection and Collaboration. Working paper. School of Business, University of Connecticut, Storrs, CT (2011).
[27] and , Optimal service contract under cost information symmetry/asymmetry. J. Oper. Res. Soc. 67 (2016) 269–279. | DOI
[28] , , and , Service channel choice for supply chain: Who is better off by undertaking the service? Prod. Oper. Manage. 25 (2016) 516–534. | DOI
[29] and , Competitive outsourcing: Choosing between value-added services and key component supplying capability. Int. J. Prod. Res. 53 (2015) 3635–3650. | DOI
[30] and , Order splitting in single sourcing with scheduled-release orders. J. Oper. Res. Soc. 57 (2006) 177–189. | DOI | Zbl
[31] and , A differential game theoretic model for duopolistic competition on design quality. RAIRO:OR 45 (1997) 886–893. | Zbl
[32] , , , and , Strategic analysis of dual sourcing and dual channel with an unreliable alternative supplier. Prod. Oper. Manage. 28 (2019) 570–587. | DOI
[33] SamMobile, Batteries from Samsung SDI won’t be used in the Galaxy Note 7 temporarily. Available at: https://www.sammobile.com/2016/09/05/batteries-from-samsung-sdi-wont-be-used-in-the-galaxy-note-7-temporarily/ (2020).
[34] and , Dual sourcing under disruption risk and cost improvement through learning. Eur. J. Oper. Res. 250 (2016) 226–238. | DOI | MR
[35] and , Economic models for vendor evaluation with quality cost analysis. Manage. Sci. 42 (1996) 1531–1543. | DOI | Zbl
[36] , How to Check if your iPhone 6S has TSMC or Samsung A9 Processor. Available at: https://www.techwalls.com/iphone-6s-plus-tsmc-samsung-cpu/ (2020).
[37] , Strategic sourcing: To make or not to make. Harvard Bus. Rev. 70 (1992) 98–107.
[38] , , Mixed-strategy equilibria in a quality differentiation model. Int. J. Ind. Organiz. 19 (2001) 213–226. | DOI
[39] , and , On the advantage of quantity leadership when outsourcing production to a competitive contract manufacturer. Prod. Oper. Manage. 22 (2013) 104–119. | DOI
[40] , and , Coordinating a supply chain with a quality assurance policy via a revenue-sharing contract. Int. J. Prod. Res. 49 (2011) 99–120. | DOI | Zbl
[41] , Contract efficiency for a decentralized supply chain in the presence of quality improvement. Int. Trans. Oper. Res. 22 (2015) 713–734. | DOI | MR
[42] , and , Single or dual sourcing: Decision-making in the presence of supply chain disruption risks. Omega-Int. J. Manage. Sci. 37 (2009) 788–800. | DOI
[43] , and , Pushing quality improvement along supply chains. Manage. Sci. 53 (2007) 421–436. | DOI | Zbl
[44] and , Optimal contract design for outsourcing: pricing and quality decisions. Int. J. Revenue Manage. 3 (2009) 197–217. | DOI
Cité par Sources :
