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Supply Contract Competition and Sourcing Policies

  • Wedad J. Elmaghraby


    (School of IsyE, Georgia Institute of Technology, 765 Ferst Drive, Atlanta, Georgia 30332-0205)

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    Advances in information technology have opened new venues for companies to create flexible supply chains by offering high-speed communication and tight connectivity. A growing number of companies are taking advantage of new opportunities to outsource portions of their production and other operations. Given the importance of the supplier selection process in the ultimate success of a product, a purchasing manager must understand the different sourcing strategies that she or he can use and the suitability of each sourcing arrangements for her or him. This paper provides an overview of the research that has been done in the fields of operations research and economics on the topic of sourcing strategies. In aggregate, this paper provides a blueprint of what market characteristics can heavily influence a buyer-supplier relationship and, hence, are important to identify and incorporate into the supplier selection process.

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    Article provided by INFORMS in its journal Manufacturing & Service Operations Management.

    Volume (Year): 2 (2000)
    Issue (Month): 4 (April)
    Pages: 350-371

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    Handle: RePEc:inm:ormsom:v:2:y:2000:i:4:p:350-371
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    1. James J. Anton & Dennis A. Yao, 1989. "Split Awards, Procurement, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 538-552, Winter.
    2. McGuire, Thomas G. & Riordan, Michael H., 1995. "Incomplete information and optimal market structure public purchases from private providers," Journal of Public Economics, Elsevier, vol. 56(1), pages 125-141, January.
    3. Sudhindra Seshadri & Kalyan Chatterjee & Gary L. Lilien, 1991. "Multiple Source Procurement Competitions," Marketing Science, INFORMS, vol. 10(3), pages 246-263.
    4. Klemperer, P., 1999. "Auction Theory: a Guide to the Literature," Economics Papers 1999-w12, Economics Group, Nuffield College, University of Oxford.
    5. Stole, Lars A., 1994. "Information expropriation and moral hazard in optimal second-source auctions," Journal of Public Economics, Elsevier, vol. 54(3), pages 463-484, July.
    6. Dorothy E. Klotz & Kalyan Chatterjee, 1995. "Dual Sourcing in Repeated Procurement Competitions," Management Science, INFORMS, vol. 41(8), pages 1317-1327, August.
    7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    8. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-61, October.
    9. Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. Willis R. Greer, Jr. & Shu S. Liao, 1986. "An Analysis of Risk and Return in the Defense Market: Its Impact on Weapon System Competition," Management Science, INFORMS, vol. 32(10), pages 1259-1273, October.
    11. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
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