The Effect of Learning and Integration Investment on Manufacturing Outsourcing Decisions: A Game Theoretic Approach

• 成果类型: Article
• 署名作者: Xiao, Wenli; Gaimon, Cheryl
• 署名单位: University of San Diego; University System of Georgia; Georgia Institute of Technology
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.12042
• 发表日期: 2013
• 页码: 1576-1592
• 关键词: buyer-supplier problem; integration process improvement; partial outsourcing; Stackelberg game; volume-based learning

摘要

We introduce a two-period Stackelberg game of a supplier and buyer. We recognize that learning from manufacturing experience has many advantages. Consistent with the literature, we assume both the buyer and supplier realize reductions in their respective production costs in period 2 due to volume-based learning from period 1 production. In addition, we introduce another learning concept, the future value, to capture the buyer's benefits of transferring current manufacturing experience for the design and development of future products and technologies. In contrast to the literature, we allow the supplier two mechanisms to impact the buyer's outsourcing decision: price and the investment in integration process improvement (IPI) that reduces the buyer's unit cost of integration. IPI may include the investment in new materials, specialized technology, or the re-design of the integration process. Conditions are given whereby the buyer partially outsources component demand as opposed to fully outsourcing or fully producing in-house. Furthermore, conditions are given characterizing when the supplier's price and investment in IPI are substitute strategies versus complements. Both analytic and numerical results are presented.