R&D Decision-making Research Of Supplier

R&D decision-making of supplier is included of independent R&D decision andpassively participate decision. Based on research conclusion of Bhaskaran and Krishnan,R&D Decision-making of supplier is divided into3purposes: reducing the cost,improveing product quality, sharing development costs of manufacturer.Sharing R&D cost is a common way suppliers passively taking part in the R&Dprocess. Manufacturer has long called for the input from suppliers to decreasemanufacturing cost and share risk. Sharing R&D cost is a common way supplierspassively taking part in the R&D process. Manufacturer has long called for the inputfrom suppliers to decrease manufacturing cost and share risk. However, with theincreasingly complex of product technology and the suppliers’ technical ability,Suppliers is taking more and more research and development tasks and confronted withbigger challenges in R&D. Supplier is not only involved in R&D, but also makingindependent R&D decision in a real scene with many manufacturers. So its R&Ddecisions is constrainted by internal and externalities, especially the manufacturers.Given the practical universality that suppliers may simultaneously face multiplemanufacturers, suppliers confront a dilemma between choosing generic technology andspecial technology when conducting independent R&D with fixed resources, namelychoosing the generic technology with which suppliers increase product quality anddecrease cost for all manufacturers, or choosing the special technology particularlycrafted for a certain manufacturer.From the optic angle of China automobile industry, this paper collects will theoryof suppliers’ participation with the practice of China auto parts industry with a casestudy of Wan Li, an auto battery company participating in the automobilemanufacturer’s R&D decision-making process. Based on three R&D scenes of Wan Li,this paper constructs two R&D purpose situations of reducing part cost and improvingfinal product quality. Suppliers’ optimal decision-making regarding the selection isanalyzed between generic technology and special technology in those twoaforementioned situations. With the third situation of suppliers’ passive participationrequired by manufacturers, suppliers’ optimal R&D cost sharing proportion is studiedwith different share willings.This paper further discusses how suppliers conduct independent R&D decision-making when facing the dilemma between choosing the generic technologyand special technology.Focusing on the R&D issue of supplier dealing with multiple manufacturers in asituation that decreasing the cost becomes the goal, this paper establishes two dynamicgame models based on supplier’s selection between the generic technology and specialtechnology, and provides the optimal R&D decision-making. Based on these twodifferent technological choices, two conditions that supplier would reach the optimalR&D level and their respective priori intervals are offered through the comparison ofthe optimal R&D level between the two choices. Supplier’s different technology choiceswill result in different component cost decreasing ranges. This paper subsequentlydiscusses the impacts on supplier’s optimal R&D decision-making under two situationsbrought by the change of parameters, and gives the corresponding numerical solutions,which indicates a stark contrast between supplier’s optimal R&D level andmanufacturer’s unit cost when supplier chooses different technology. When choosingthe generic technology, it is negatively related to two manufacturers’ unit cost, on theother hand, when choosing the special technology, it is positively related tomanufacturer dealing with special orientation, while negatively related to manufacturerwithout specialized orientation.The second participation form of supplier deals with enhancing the product quality.With this being the premise, this paper then discusses how supplier could reach theoptimal R&D level, maximum profit and the decision-making about participation andrestriction when making different choices between the generic and special technology.Instead of directly dealing with the consumer market, supplier faces differentmanufacturers, and supplier’s different choices on R&D goals will result in differenttechnology paths, consequently bringing in different market changes. By establishingthe two-stage non-cooperative game model, this paper addresses the maximized profit,the optimal R&D level and the participation and restriction conditions when makingdifferent choices, and by comparing the maximized profits resulted in differenttechnology choices, this paper therefore offers the priori interval for each technologychoice and the condition under which the supplier’s maximized profit will stay the same.A sensibility analysis is conducted for those parameters impacting the R&Ddecision-makings under different technology choices by using computational example,which indicates the impacts on the supplier’s optimal R&D decision-making under these two selections brought by supplying component unit cost, supplying componentprice, end product substitution rate and unit R&D cost change.Considering suppliers with different share willing, incentive mechanism ofdelivery increased ratio is obtained by sharing cost while suppliers participate in thedesigning. The optimal sharing proportion of R&D cost is studied while supplier sharethe manufacturer R&D cost.In a supply chain consisted of two suppliers and onemanufacturer, it is clear that not all suppliers will make the same decision, therefore thispaper only considers the situation that only one supplier takes part in the R&D costsharing. By increasing the supplying ratio for suppliers participating the sharing, themanufacturer introduces an incentive mechanism, while still guarantees that thesupplying volume from suppliers not taking in part of the sharing, will not be less thanthe supplying volume before sharing. Through the reverse induction method, this papercomes up with suppliers’ optimal R&D cost sharing ratio and the increased supplyingratio interval whose range is determined by suppliers’ ability to negotiate with themanufacturer. In the meantime, supplies participating sharing the R&D cost will only bemotivated to invest when unit product profit exceeds manufacturer unit product profit toa certain percentage. The sensibility analysis is conducted for parameters impacting thesupplier’s optimal R&D cost sharing ratio through computational example.