E-channel management under vendor-managed inventory by option and conventional contracts: the influence of outsourcing decisions

Ahmadi Nezhad A. M., Mazloum M., Bakhshi A., Jolai F., Aghsami A.

Journal of Industrial and Production Engineering, cilt.41, sa.5, ss.456-485, 2024 (ESCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 41 Sayı: 5
  • Basım Tarihi: 2024
  • Doi Numarası: 10.1080/21681015.2024.2333373
  • Dergi Adı: Journal of Industrial and Production Engineering
  • Derginin Tarandığı İndeksler: Emerging Sources Citation Index (ESCI), Scopus, Academic Search Premier, Aerospace Database, Communication Abstracts, Compendex, INSPEC, Metadex, Civil Engineering Abstracts
  • Sayfa Sayıları: ss.456-485
  • Anahtar Kelimeler: E-channel coordination, Option contract, outsourcing, reliable production, VMI
  • Ankara Yıldırım Beyazıt Üniversitesi Adresli: Hayır

Özet

In the era of widespread e-commerce adoption, businesses encounter challenges in managing e-channel demand and production constraints. This study explores an e-channel with an e-retailer with no pattern demand, a primary supplier, and a backup supplier to address these issues through outsourcing. The primary supplier, facing limited production capacity and potential failure, seeks assistance from the backup supplier under a vendor-managed inventory (VMI) strategy. Two contracts, a conventional contract with penalties for rejecting units and an option contract allowing negotiations, are compared. Results indicate that the option contract promotes a win-win scenario, enhancing overall e-channel efficiency and earnings compared to the conventional contract. Negotiations facilitated by the backup supplier contribute to e-channel coordination. However, if the option price exceeds the penalty difference, the conventional contract may be more attractive to the primary supplier.