This paper analyzes risk management contracts used to handle currency risk in a decentralized supply chain that consists of risk-averse divisions in a multinational firm. Particular contracts of interest involve transferring risk to a third party by using risk-transfer contracts such as currency options and re-arranging risk between supply chain members using risk-sharing contracts. Due to dece...

In recent years the management of risk in supply chains has become an important issue in the scientific literature. This aspect is of primary interest in market side decisions of a company such as in the procurement of materials. So far, traditional supply chain planning methods solely focus on improving cost efficiency and reducing inventory buffers in supply chains. These approaches are succe...

W every firm in a supply chain bears supply risk (the cost of insufficient supply), some firms may, even with wholesale price contracts, completely avoid inventory risk (the cost of unsold inventory). With a push contract there is a single wholesale price and the retailer, by ordering his entire supply before the selling season, bears all of the supply chain’s inventory risk. A pull contract al...

1 This paper is an invited chapter to be published in the Handbooks in Operations Research and Management Science: Supply Chain Management, edited by Steve Graves and Ton de Kok and published by North-Holland. I would like to thank the many people that carefully read and commented on the ...rst draft of this manuscript: Ravi Anupindi, Fangruo Chen, Charles Corbett, James Dana, Ananth Iyer, Ton ...

According to the Council of Supply Chain Management Professionals (September 2007), we have the following description for supply chain management: “supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel pa...

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T coordination of supply chains by means of contracting mechanisms has been extensively explored theoretically but not tested empirically. We investigate the performance of three commonly studied supply chain contracting mechanisms: the wholesale price contract, the buyback contract, and the revenue-sharing contract. The simplified setting we consider utilizes a two-echelon supply chain in whic...

Supply reliability may suffer due to events such as labor strikes that disrupt capacity (random capacity) or manufacturing defects that result in yield losses (random yield). Suppliers can enhance reliability by process improvement and overproduction, but these mitigating actions are often not contractible. Moreover, the investment in mitigation depends critically on the design of the procureme...