A study on preconditions setting of long-term contract between manufacturer and component supplier

Sidi Wu, Hisashi Onari

    Research output: Chapter in Book/Report/Conference proceedingConference contribution

    Abstract

    To provide a risk-sharing mechanism that encourages a component supplier and a manufacturer to expand their production capacity of components and products, many researches on SCM suggested that it is better for the SC players to connect a long-term contract with flexible preconditions before doing the decision-making of production capacity. With considering of the uncertainty of demand and integrity problems between SC players, it is difficult to set reasonable preconditions. As a result, under-investment problems still occur frequently. In this paper, after we had discussed the decision-making of production capacity with the preconditions by analyzing the character of the players, we verified the under-investment problem of the supply chain. In order to clarify the optimum preconditions to alleviate the under-investment problem, we also analyzed the relations between preconditions and supply capacity of the whole supply chain. In the last part of this paper, we proposed a method of preconditions setting in such uncertain situations.

    Original languageEnglish
    Title of host publication23rd International Conference for Production Research, ICPR 2015
    PublisherInternational Foundation for Production Research (IFPR)
    Publication statusPublished - 2015
    Event23rd International Conference for Production Research, ICPR 2015 - Manila, Philippines
    Duration: 2015 Aug 22015 Aug 6

    Other

    Other23rd International Conference for Production Research, ICPR 2015
    CountryPhilippines
    CityManila
    Period15/8/215/8/6

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    Keywords

    • Contract
    • Production capacity
    • Supply chain management
    • Under investment

    ASJC Scopus subject areas

    • Computer Science Applications
    • Control and Systems Engineering
    • Industrial and Manufacturing Engineering

    Cite this

    Wu, S., & Onari, H. (2015). A study on preconditions setting of long-term contract between manufacturer and component supplier. In 23rd International Conference for Production Research, ICPR 2015 International Foundation for Production Research (IFPR).