Decentralization Policies for Supply Chain Investments under Asymmetric Information

Per Joakim Agrell, Peter Bogetoft

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Abstrakt

Supply chains need specific investments for improved performance in terms of lead-time, cost, and quality. We study the contractual choice of a coordinator to either centralize or delegate the investment decision in a three-stage chain. The analysis derives closed-form results for the economic performance of three decentralized contracting schemes under asymmetric information on investment cost, as well as the optimal full revelation results. The results show that the observed practice of tier-1 delegated investments leads to relatively poor performance because of underinvestment. We illustrate the findings with the Boeing 787 debacle. Copyright © 2016 John Wiley & Sons, Ltd.
OriginalsprogEngelsk
TidsskriftManagerial and Decision Economics
Vol/bind38
Udgave nummer3
Sider (fra-til)394-408
Antal sider15
ISSN0143-6570
DOI
StatusUdgivet - apr. 2017

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