W e analyze a decentralized supply chain with a single risk-averse retailer and multiple risk-averse suppliers under a Conditional Value at Risk objective. We define coordinating contracts and show that the supply chain is coordinated only when the least risk-averse agent bears the entire risk and the lowest-cost supplier handles all production. However, due to competition, not all coordinating...

Screening contracts (or non-linear “menu of contracts”) are frequently used for aligning the incentives in supply chains with private information. In this context, it is assumed that all supply chain parties are strictly (expected) profit maximizing and, therefore, sensible to even arbitrarily small pay-off differences between contract alternatives. However, previous behavioral work on contract...

Real life contracts imply commitments which are active during their running window, with effects on both normal runs as well as in the case of exceptions. We have defined defeasible commitment machines (DCMs) to provide more flexibility. As an extension to the task dependency model for the supply chain we propose the commitment dependency network (CDN) to monitor contracts between members of th...

We consider supplier development within a supply chain consisting of a single manufacturer and a single supplier. Because investments in supplier development are usually relationship-specific, safeguard mechanisms against the hazards of partner opportunism have to be installed. Here, formal contracts are considered as the primary measure to safeguard investments. However, formal contracts entai...

I is common for a retailer to sell products from competing manufacturers. How then should the firms manage their contract negotiations? The supply chain coordination literature focuses either on a single manufacturer selling to a single retailer or one manufacturer selling to many (possibly competing) retailers. We find that some key conclusions from those market structures do not apply in our ...

We concentrate on a principal and agent system often seen in supply chain management studies. Under reasonable conditions, we show that a nearly systematic three-step method can be used to find coordination contracts for the system. The number of terms involved in our contract is in some sense positively correlated with the degree of information asymmetry between the principal and agent. Severa...

We study supply chain contracting with investment in demand forecasting under downstream competition. Supporting some recent industry observations, we show that under common pricing schemes, such as wholesale price or two-part tariff, downstream firms overinvest in demand forecasting. Analyzing the bounds and determinants of overinvestment, we demonstrate that the wholesale price and two-part t...

This study explores how distinct information access patterns affect a supplier’s supply chain agility. A supplier’s specific investments for IT-enabled supply chain coordination and relational adaptation in supply chain operations are identified as the technical and behavioral antecedents to its supply chain agility. Because both are non-contractible elements in formal contracts and complementa...

We consider a decentralized two-period supply chain in which a manufacturer produces a product and sells it through a retailer facing a price-dependent demand. We assume that the secondperiod production cost declines linearly in the first-period production, but with a random learning rate. As the mean and/or the standard deviation of the learning rate increase, the traditional double marginaliz...

We show that when a one-supplier/one-newsvendor supply chain is capacity-constrained, wholesale price contracts have some flexibility in allocating the channel-optimal profit. We analyze how this flexibility changes as we change the supply chain's capacity constraint and market demand. We also explore the allocation that is achieved in equilibrium in a newsvendor procurement game. Finally, we g...