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: | Arcelus F.J., Srinivasan G., Pakkala T.P.M. |
Keywords: | risk |
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.