Abstract
Outsourcing has been praised as a cost effective solution for many companies. One of the major potential issues of outsourcing is the poor quality of outsourcing work. In this research, Stackelberg game is used to design an outsourcing contract for a supplier and a buyer to decide the optimal outsourcing price, retail price, and outsourcing quality with demand uncertainty. The supplier and buyer’s demand forecasting are private information to each part and cause asymmetric information in the outsourcing contract design. Three different forecast scenarios are studied, including Non-Information Sharing, Information Sharing, and Buyer Forecasting case. Optimal values of outsourcing price, retail price, and outsourcing quality level are derived. We then compare the optimal policies of three cases and derive several managerial insights. Results of extensive numerical experimentation are also presented.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
