Due-date, capacity and inventory coordination in high-tech manufacturing supply chains: Game theoretic analysis

We investigate coordination mechanisms for the purpose of improving supply chain efficiency with an emphasis on the high-tech industry. Motivated by real-world situations in the semiconductor and telecommunications equipment industries, we examine topic areas of critical importance in this environment: due-date negotiation, capacity contracting, and inventory stocking strategies. Most of our analyses are based on game theoretic models focusing on analytical insights. This dissertation addresses three topic areas organized in four self-contained technical papers.; In the first topic area, we study due-date coordination between the marketing and manufacturing entities within an engineer-to-order firm. We design a Nash game where each decision entity quotes a due-date based on a utility function defined by its local cost structure, a belief function of job completion times, and a negotiated penalty for tardiness. We develop an incentive scheme to coordinate the manufacturing and marketing entities such that the system-optimal solution can be achieved at Nash equilibrium.; The second topic area examines capacity coordination between suppliers and OEM buyers in a high-tech manufacturing supply chain. The topic is explored in two separate chapters, where we first consider a one-supplier one-buyer base model, then a one-supplier multiple-buyer settings with buyer competition. We propose capacity reservation contracts where the buyer(s) reserves future manufacturing capacity by paying a fee that is (partially) deductible from the order payment. We derive contract conditions (e.g., reservation fee, order quantity) under which reservation is win-win for all parties involved, i.e., the supplier shares the capacity-expansion risk with the buyers, the buyers ensure ample capacity for their expected demand. We identify insights of critical strategic importance for manufacturers in this competitive environment.; In the third topic area we explore the issue of inventory coordination in the emerging environment of contract manufacturing. We examine base-stock inventory policies for a equipment supplier who has supply agreements with an OEM customer, but is obligated to on-time delivery to the OEM's contract manufacturers. We analyze the cost-tradeoff for centralized vs. distributed inventory strategies in this setting and design inventory reservation contracts as a means to coordinating the system.