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Analysis on Game of Service Outsourcing About Service Quality and Price Decision

In: Proceedings of 20th International Conference on Industrial Engineering and Engineering Management

Author

Listed:
  • You-de Dong

    (Shanghai University)

  • Qin-zhu Li

    (Shanghai University)

Abstract

Decision of quality and price causes a widespread attention because it affects the efficiency of service outsourcing. Firstly, this paper analyses the relationship of outsourcer and contractor in service outsourcing with Game Theory. Two models about service quality and price decision are established, one is Stackelberg dynamic game model which is based on individual decision-making of outsourcer and contractor, the other is a collaborative decision-making game model. Then, gross profit and optimal strategies about price and quality of Stackelberg dynamic game model are modified with two—stage backwards induction method. The optimal profit and strategies of collaborative decision-making game model are solved out by first-order optimization analysis. Finally, through comparing the optimal profits and strategies of these two models, the study finds out that customer demand and gross profit of the collaborative decision-making model are larger than those in individual decision-making while the service quality remains unchanged.

Suggested Citation

  • You-de Dong & Qin-zhu Li, 2013. "Analysis on Game of Service Outsourcing About Service Quality and Price Decision," Springer Books, in: Ershi Qi & Jiang Shen & Runliang Dou (ed.), Proceedings of 20th International Conference on Industrial Engineering and Engineering Management, edition 127, pages 533-541, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-40063-6_53
    DOI: 10.1007/978-3-642-40063-6_53
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