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Towards the development of an intelligent supply contract design system

Towards the development of an intelligent supply contract design system Purpose – Many supply contracts are employed in practice to improve the performance of supply chains. But there is a lack of research that can offer guidance to practitioners in choosing the best supply contract among a group of popular contracts. This paper aims to fill this gap by developing an intelligent rule‐based supply contract design system for choosing the best contract and its parameters from a supplier's point of view. Design/methodology/approach – The approach used in this paper is based on the comparison of several supply contracts that are encountered in supply chain practice. The paper aims at identifying the conditions under which one supply contract outperforms another from the supplier's perspective. To facilitate the implementation of the decision‐making rules that are developed in this research, an intelligent decision support system is developed. Findings – Six popular contracts are analysed; returns policy (RP), quantity discount (QD), target rebate (TR), backup agreement (BA), quantity flexibility (QF), and quantity commitment (QC). The main findings are: QD contracts generate larger expected profits for the supplier than TR contracts do when the demand is exogenous, an RP contract is better than a QD contract when the wholesale profit margin is sufficiently large and that the optimal QC contract always provides a higher expected service level than BA and QF contracts. Originality/value – The paper presents an approach for developing an intelligent supply contract design system that can offer guidance to practitioners in choosing the best supply contract for a particular supplier. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Manufacturing Technology Management Emerald Publishing

Towards the development of an intelligent supply contract design system

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References (25)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1741-038X
DOI
10.1108/17410381111149648
Publisher site
See Article on Publisher Site

Abstract

Purpose – Many supply contracts are employed in practice to improve the performance of supply chains. But there is a lack of research that can offer guidance to practitioners in choosing the best supply contract among a group of popular contracts. This paper aims to fill this gap by developing an intelligent rule‐based supply contract design system for choosing the best contract and its parameters from a supplier's point of view. Design/methodology/approach – The approach used in this paper is based on the comparison of several supply contracts that are encountered in supply chain practice. The paper aims at identifying the conditions under which one supply contract outperforms another from the supplier's perspective. To facilitate the implementation of the decision‐making rules that are developed in this research, an intelligent decision support system is developed. Findings – Six popular contracts are analysed; returns policy (RP), quantity discount (QD), target rebate (TR), backup agreement (BA), quantity flexibility (QF), and quantity commitment (QC). The main findings are: QD contracts generate larger expected profits for the supplier than TR contracts do when the demand is exogenous, an RP contract is better than a QD contract when the wholesale profit margin is sufficiently large and that the optimal QC contract always provides a higher expected service level than BA and QF contracts. Originality/value – The paper presents an approach for developing an intelligent supply contract design system that can offer guidance to practitioners in choosing the best supply contract for a particular supplier.

Journal

Journal of Manufacturing Technology ManagementEmerald Publishing

Published: Jul 26, 2011

Keywords: Supply contracts; Intelligent decision support systems; Rule‐based reasoning, Supply, Supply chain management

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