A purchasing framework for B2B pricing decisions and risk-sharing in supply chains

A purchasing framework for B2B pricing decisions and risk-sharing in supply chains

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Article ID: iaor20041439
Country: United States
Volume: 33
Issue: 4
Start Page Number: 645
End Page Number: 666
Publication Date: Sep 2002
Journal: Decision Sciences
Authors: , ,
Keywords: risk
Abstract:

This paper presents a common modelling structure for (i) the implementation of operational policies by individual purchasing managers of risk-sharing agreements among supply-chain partners, and (ii) the integration of brick and click purchasing policies in a B2B. The problem of price uncertainty created within these two environments is modelled as a stochastic repetitive-sales problem, applicable to any probability distribution. The model identifies sufficient conditions for regenerative ordering cycles, which allows for the use of the renewal reward theorem. The end result is a two-price purchasing policy, which may substantially ease implementation problems across a global corporation's purchasing managers world-wide and across B2B markets.

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