A Purchasing Framework for B2B Pricing Decisions and Risk-sharing in Supply Chains

This paper presents a common modelling structure for (i) the implementation of operational policies by individual purchasing managers of risk-sharing agreements among supply-chain partners, and (ii) the integration of brick and click purchasing policies in a B2B. The problem of price uncertainty created within these two environments is modelled as a stochastic repetitive-sales problem, applicable to any probability distribution. The model identifies sufficient conditions for regenerative ordering cycles, which allows for the use of the renewal reward theorem. The end result is a two-price purchasing policy, which may substantially ease implementation problems across a global corporation’s purchasing managers world-wide and across B2B markets. Subject Areas: Global Operations Management, Inventory Management, Stochastic Processes, and Supply Chain Management.