The 4th International Symposium on Project Management (ISPM 2016)

234 / 2016-07-06 21:14:07

Game Analysis in an Assembly Supply Chain under Logistics Outsourcing

Logistics outsourcing,Assembly supply chain,Dynamic game,Supply chain efficiency

In practical assembly supply chains, logistics outsourcing is common and firms’ interactions are very complex given the existence of multiple firms. This paper investigates firms’ strategic interaction in an decentralized assembly supply chain with one logistics provider, multiple suppliers, and one manufacturer. Two different cases in which the suppliers outsource their transportation operations to the logistics provider independently, and to the logistics provider jointly, respectively. The dynamic game is modeled for each case and the equilibrium outcomes are derived. It is found that the total transportation service prices of the two cases are equal, and the manufacturer’s market decisions and the firms’ profits are identical in the two cases. It is also found that the supply chain efficiency in each case is lower in the decentralized assembly supply chain than in the centralized supply chain. In particular, the increased number of the suppliers has a decreasing effect on the supply chain efficiency.