Title

A note on competitive supply chains with generalised supply costs

Document Type

Journal article

Source Publication

European Journal of Operational Research

Publication Date

12-16-2010

Volume

207

Issue

3

First Page

1316

Last Page

1320

Keywords

Marketing, supply chain outsourcing, channel competition

Abstract

This note generalises models from two influential papers in the theory of supply chain outsourcing under competition: McGuire and Staelin (1983) and Cachon and Harker (2002). The first paper studies the impact of competitive intensity on the outsourcing decision from the supplier's point of view for linear supply cost; the second paper examines the impact of supply economies of scale from the retailer's point of view when selling perfectly substitutable products. By considering competitive intensity and supply economies of scale simultaneously, we find that equilibrium channel structures are primarily determined by the competitive intensity, which is true even under supply diseconomies of scale; the key message in the second paper of scale economies driving retailer's outsourcing supply decision is highly dependent on the assumption of perfect substitutes. Our finding has no qualitative difference when either the suppliers or the retailers are modeled as the channel leader and make the outsourcing decisions.

DOI

10.1016/j.ejor.2010.07.012

Print ISSN

03772217

E-ISSN

18726860

Publisher Statement

Copyright © 2010 Elsevier B.V

Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Atkins, D., & Liang, L. (2010). A note on competitive supply chains with generalised supply costs. European Journal of Operational Research, 207(3), 1316-1320. doi: 10.1016/j.ejor.2010.07.012