CONTRACT STRATEGIES WITH OPTIONS IN SUPPLY CHAINS AND PREDICTIVE MODELS FOR PURCHASING CENTRALIZATION DECISIONS
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This dissertation consists of four chapters. In Chapter 1, the background and motivation of the research on supply contracting strategy and purchasing centralization decisions are provided. In Chapter 2, a generic framework for pricing supply contracts in a two-echelon supply chain in the presence of a spot market is provided. An optimal integration of contracts with spot market transactions in response to demand and spot price uncertainties is considered. Analytical models are developed to demonstrate the combination of options with wholesale price contracts is incentive compatible for both players. Optimal Joint pricing/production strategies are characterized. We numerically illustrate the benefits of combining options with wholesale price contracts in improving channel performances and achieving a Pareto improvement. Conditions that influence the choice of contract forms and pricing and risk profiles of different contracts are discussed. In Chapter 3, we explore the option contract strategies of a two-echelon supply chain under voluntary compliance, which provides the supplier flexibility in production decision. Considering both supply chain players' strategic behavior in game dynamics, we demonstrate optimal strategies and profits of a single-supplier single-retailer system with exogenous contract terms, and characterize the system operating regimes under different contract prices. We extend the analysis to a single-supplier multiple-retailer system, where the supplier is able to take advantage of the risk pooling benefits through options. The impacts on the supply chain members' optimal decisions and profits are characterized. Analytical results are provided regarding the effects of key system parameters on the supplier's decision and profit. Numerical studies are performed to confirm these findings and provide insights into how the risk-pooling effect interacts with the strategic dynamics in this multi decision-maker game. In Chapter 4, following the predictive global sensitivity analysis approach, we develop a predictive model to support purchasing centralizations decisions and monitor centralization schemes when items are introduced over time. Key system parameters are identified and aggregated to represent their relations to the centralization scheme decisions. Numerical studies are performed to illustrate the model building process and to assess the model's goodness-of-fit and predictive capability.