Sourcing decisions with capacity reservation contracts

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dc.citation.epage648en_US
dc.citation.issueNumber3en_US
dc.citation.spage635en_US
dc.citation.volumeNumber131en_US
dc.contributor.authorSerel, D. A.en_US
dc.contributor.authorDada, M.en_US
dc.contributor.authorMoskowitz, H.en_US
dc.date.accessioned2016-02-08T10:35:17Z
dc.date.available2016-02-08T10:35:17Z
dc.date.issued2001en_US
dc.departmentDepartment of Managementen_US
dc.description.abstractBy committing to long-term supply contracts, buyers seek to lower their purchasing costs, and have products delivered without interruption. When a long-term contract is available, suppliers are less pressured to find new customers, and can afford to charge a price lower than the prevailing spot market price. We examine sourcing decisions of a firm in the presence of a capacity reservation contract that this firm makes with its long-term supplier in addition to the spot market alternative. This contract entails delivery of any desired portion of a reserved fixed capacity in exchange for a guaranteed payment by the buyer. We investigate rational actions of the two parties under two different types of periodic review inventory control policies used by the buyer: the two-number policy, and the base stock policy. When typical demand probability distributions are considered, inclusion of the spot market source in the buyer's procurement plan significantly reduces the capacity commitments from the long-term supplier.en_US
dc.identifier.doi10.1016/S0377-2217(00)00106-5en_US
dc.identifier.eissn1872-6860
dc.identifier.issn0377-2217
dc.identifier.urihttp://hdl.handle.net/11693/24850
dc.language.isoEnglishen_US
dc.publisherElsevieren_US
dc.relation.isversionofhttp://dx.doi.org/10.1016/S0377-2217(00)00106-5en_US
dc.source.titleEuropean Journal of Operational Researchen_US
dc.subjectCapacity reservationen_US
dc.subjectInventoryen_US
dc.subjectLong-term contractsen_US
dc.subjectSupply chain managementen_US
dc.subjectContractsen_US
dc.subjectDecision makingen_US
dc.subjectInventory controlen_US
dc.subjectCapacity reservation contractsen_US
dc.subjectOutsourcingen_US
dc.titleSourcing decisions with capacity reservation contractsen_US
dc.typeArticleen_US

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