| In essay 1, we consider a multi-tier supply chain consisting of an original equipment manufacturer (OEM), a contract manufacturer (CM) and a supplier and study two outsourcing structures, control and delegation. Under control, the OEM takes a direct control over component procurement and the CM is responsible for manufacturing. Under delegation, the CM performs both manufacturing and the procurement functions for the OEM. We study the performance of supply chain parties under the two outsourcing structures and we consider push and pull contracts. We show that under push, the OEM prefers delegation if the wholesale price it pays to the CM under delegation is no more than the sum that it pays to the CM and supplier under control. As to pull, we find that the OEM is more likely to prefer delegation if the wholesale price under delegation is in a moderate range.;We continue to investigate the comparison of outsourcing structures when the wholesale prices are decided via a cooperative generalized Nash bargaining (GNB) game. We find that delegation always generates a lower procurement price for the OEM, which, however, may reduce the supplier's capacity building-up incentives. We also find that push contract plays an important role in coordinating the supply chain when the CM and the supplier have unbalanced capacity set-up incentives and/or the demand uncertainty is large.;The third essay studies a supply chain consisting of an OEM and a CM, where the CM is both an upstream partner and a downstream competitor of the OEM. They can engage in a "simultaneous"-move game, or a sequential game with either the OEM or the CM as the Stackelberg leader. We investigate the two parties' decisions on choosing leadership or followership. We find that the OEM prefers sourcing entirely from the competitive CM and the competitive CM will set a wholesale price low enough to allow both parties to coexist in the market. We also find that a Stackelberg equilibrium is sustained when the competitive CM has a large bargaining power and the non-competitive CMs' wholesale price is high enough. |
