Study Of Quantity Contract On F Group’s Raw Material Procurement

At the end of the20th century, more and more countries and enterprises areinvolved into the global economic activities with the rapid development ofinformation technology. In the Global complex economic market, the new mode ofcompetition among the supply chains around the core business brings forth. Thevery important for the global enterprises to set up dominance is to manage andcoordinate their supply chains well. So as the one of the most impactful ways tocoordinate the supply chain, the supply chain contracts are studied deeply.Meanwhile, with the global industry restructuring, multinational companiesoutsource their non-core business, such as the labor-intensive industry and Chinahas become the world’s manufacturing center. But with China’s economicdevelopment, labor and raw material costs continues to rise, the manufacturing iscoming into the era of meager profit in the fierce competitive market. It is a mustto establish a good relationship with the suppliers, control the cost of raw materialprocurement. Or the manufacturing enterprise can’t subsist and develop.Based on the previous studies, this thesis analyzes and discusses the quantityflexibility contract in the conditions of supply uncertainly and the quantitydiscount contract in the condition of supply certain. Because the manufacturers’optimal expected profit is always reduced with increasing the level of supplyuncertainly, they should choose the more reliable suppliers, or try to help thesuppliers improve the reliability of supply. And this thesis also designs the modelsto help the manufacturers choose the optimal order quantity, calculate theprocurement cost saving and design the optimal discount contract.The combined F Group’s current procurement operations and status, theirsuppliers are classified into the strong suppliers and weak suppliers based on thesupply subdivision method. F Group can respectively establish the quantityflexibility contract with the strong suppliers and quantity discount contract withthe week suppliers, and improve it procurement efficiency and lower itprocurement costs by using the conclusion from this study.