Analysis of the Market‐Based Adjustable Outsourcing Contract under Uncertainties

The market‐based adjustable contract for customized goods or services has emerged in outsourcing practices. Its objective is to minimize the operational risks inherent in today's volatile environment of operations. Our research reveals several important properties of this contract through a continuous‐time analytical approach. Specifically, we consider the determination of this contract between two risk‐averse firms through a Nash bargaining process. We derive the optimal adjusting mechanism analytically and extensively analyze the application boundary of the market‐based adjustable outsourcing contract. We conclude by discussing implications for practice and research.

• 저널Production and Operations Management · 22(1) · 178–188
• 토픽Supply Chain and Inventory Management · Management Information Systems
• DOI10.1111/j.1937-5956.2012.01349.x
• 저자Baichun Feng, Tao Yao, Bin Jiang