Essays in supply chain contracting: Dual channel management with service competition and quality risk in outsourcing

Recent business trends have caused supply chain members to assume new roles down the chain. Suppliers are undertaking tasks that were once in the manufacturers' domain such as procurement and design; while manufacturers have been entering into the retail domain by opening direct sales channels. This dissertation addresses incentive and contracting issues in this new supply chain environment.; In Chapter 2, we study an original equipment manufacturer (OEM)'s problem of reduced profit and product quality due to outsourcing to a contract manufacturer (CM), which we refer to as quality risk. We investigate the effects of two quality risk factors: noncontractible quality and private CM quality cost on the OEM's profit and product quality. We also address how the OEM's commitment to a sales price affects the quality risk factors.; In Chapter 3, we study a manufacturer's problem of managing its direct online channel alongside an independent bricks-and-mortar retail channel, when the channels compete in service. We incorporate a detailed consumer choice model in which the consumers consider the delivery lead time in the direct channel and the product availability level in the retail channel in their channel choice. We determine optimal dual channel strategies for the manufacturer, and analyze how these strategies change with respect to changes in parameters describing the environment. We present an experimental study that investigates whether the analytical model is consistent with human behavior.; In Chapter 4, we consider a manufacturer who sells only through the retail channel. By comparing the results of this scenario with the results of the dual channel scenario of Chapter 3, we quantify the impact of the direct channel to the manufacturer's and the retailer's profits and to the service levels in channels. We also study a direct-channel-only scenario to quantify the value of the retail channel to the manufacturer.; In Chapter 5, we extend the behavioral study of Chapter 2 with additional experiments. The experiments confirm the qualitative findings of the model, and identify the behavioral factors to be considered when the model is used in addressing an actual business environment.