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A system dynamic approach towards quality in purchasing strategy

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  • Chia-Min Wei
  • Chia-Yon Chen

Abstract

All challenges, including information obtainment, advertising effect, consumer preference and short product life cycle, transfer and reform the operation and supply chain model of the auto industry, especially in lowering purchasing costs, accelerating delivery time and integrating resources. These considerations are essential in the process of enterprise development, namely the auto industry, which has to review the importance of transaction cost saving from raw materials and manufacturing, regardless of purchasing abroad or domestically. This study utilises the auto industry in Taiwan as a case study to investigate how transaction cost incentive influences the selection and implementation of purchasing strategies under different scenarios in the value chain. Furthermore, how to reach a break even point between transaction costs and agency costs and how to achieve cost minimisation in the auto industry will be estimated as well. The findings indicate that quality plays a crucial role in purchasing strategies with analysis of System Dynamics.

Suggested Citation

  • Chia-Min Wei & Chia-Yon Chen, 2009. "A system dynamic approach towards quality in purchasing strategy," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 6(4), pages 455-464.
    • Handle: RePEc:ids:ijmede:v:6:y:2009:i:4:p:455-464
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