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A note on “Quality investment and inspection policy in a supplier-manufacturer supply chain”

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  • Aust, Gerhard
  • Bräuer, Ina
  • Buscher, Udo

Abstract

In a recent paper, Hsieh and Liu (2010) consider quality investment and inspection strategies of one supplier and one manufacturer. They propose solutions of four non-cooperative game models with different degrees of information available about the players’ inspection sampling rates and quality investments. For the two most comprehensive scenarios, we show that these (interior) solutions do not always represent the optimal solutions, as the boundary solutions lead to considerably higher profits. Furthermore, we propose modified algorithms providing the optimal solutions by including the boundary solutions into the consideration.

Suggested Citation

  • Aust, Gerhard & Bräuer, Ina & Buscher, Udo, 2014. "A note on “Quality investment and inspection policy in a supplier-manufacturer supply chain”," European Journal of Operational Research, Elsevier, vol. 234(3), pages 910-915.
    • Handle: RePEc:eee:ejores:v:234:y:2014:i:3:p:910-915
    DOI: 10.1016/j.ejor.2013.11.004
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    References listed on IDEAS

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    1. Reyniers, Diane J. & Tapiero, Charles S., 1995. "Contract design and the control of quality in a conflictual environment," European Journal of Operational Research, Elsevier, vol. 82(2), pages 373-382, April.
    2. Diane J. Reyniers & Charles S. Tapiero, 1995. "The Delivery and Control of Quality in Supplier-Producer Contracts," Management Science, INFORMS, vol. 41(10), pages 1581-1589, October.
    3. Kashi R. Balachandran & Suresh Radhakrishnan, 2005. "Quality Implications of Warranties in a Supply Chain," Management Science, INFORMS, vol. 51(8), pages 1266-1277, August.
    4. Stanley Baiman & Paul E. Fischer & Madhav V. Rajan, 2000. "Information, Contracting, and Quality Costs," Management Science, INFORMS, vol. 46(6), pages 776-789, June.
    5. Wei Shi Lim, 2001. "Producer-Supplier Contracts with Incomplete Information," Management Science, INFORMS, vol. 47(5), pages 709-715, May.
    6. Hsieh, Chung-Chi & Liu, Yu-Te, 2010. "Quality investment and inspection policy in a supplier-manufacturer supply chain," European Journal of Operational Research, Elsevier, vol. 202(3), pages 717-729, May.
    7. Iny Hwang & Suresh Radhakrishnan & Lixin (Nancy) Su, 2006. "Vendor Certification and Appraisal: Implications for Supplier Quality," Management Science, INFORMS, vol. 52(10), pages 1472-1482, October.
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    Cited by:

    1. Avinadav, Tal & Chernonog, Tatyana & Fruchter, Gila E. & Prasad, Ashutosh, 2020. "Contract design when quality is co-created in a supply chain," European Journal of Operational Research, Elsevier, vol. 286(3), pages 908-918.

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