Journal of the Korean Operations Research and Management Science Society (한국경영과학회지)

The Korean Operations Research and Management Science Society (한국경영과학회)
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Buyer-Supplier Collaboration and Benefit-Sharing Strategy in a Supply Chain

공급망 상생협력 활동과 성과 공유 전략

  • Received : 2010.11.26
  • Accepted : 2011.02.25
  • Published : 2011.03.31
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Abstract

In this study, based on the principal-agent paradigm, we investigate a joint cost reduction activity in a buyer-supplier supply chain where a buyer motivates its operations department and a supplier to reduce the supply chain's production cost. We construct a benefit-sharing model based on the target cost scheme, a basic philosophy in practice which has not been explored in previous studies. The model also incorporates various supply chain issues such as the cooperation of multiple agents, the opportunity loss, and the degree of strategic relationship between the buyer and the supplier. Based on the analysis of the principal-agent model, we investigate the benefit-sharing rule to control agents' actions, and we also provide important managerial implications into supply chain practices via extensive comparative static analyses.

Keywords

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