Technical Note: Reexamination of All-or-None Inspection Policies in a Supply Chain with Endogenous Product Quality
نویسندگان
چکیده
This note studies the optimal inspection policies in a supply chain in which a manufacturer purchases components from a supplier but has no direct control of component quality. The manufacturer uses an inspection policy and a damage cost sharing contract to encourage the supplier to improve the component quality. We find that all-or-none inspection policies are optimal for the manufacturer if the supplier’s share of the damage cost is larger than a threshold; otherwise, the manufacturer should inspect a fraction of a batch. © 2008 Wiley Periodicals, Inc. Naval Research Logistics 55: 277–282, 2008
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