Research On Operational Decision And Coordination In An Assembly Supply Chain With The Assembler’s Equity Holdings In Suppliers

With the rapid development of economic globalization and the increasingly fierce market competition, the business environment of a firm becomes more complex and changeable. Under such a background, many firms have established equity strategic alliances. In an equity strategic alliance, each firm is still an independent decision-making body. That is, a holding firm can not influence the decision of the firm, which is held. This dissertation considers an assembly supply chain consisting of multiple suppliers and an assembler. Each supplier supplies a complementary component to the assembler, then the assembler assembles them into a final product and sells it to a stochastic market. The dissertation assumes that the assembler has made equity investment in an upstream supplier, and established an equity strategic alliance with the invested supplier. The assembler’s investment in the supplier may be production equipment, production technology, funding, etc. These investments allow not only the assembler to share the profit of the supplier according to the equity held, but also the supplier to reduce its production cost. The dissertation investigates the optimal operational decision of each player and the corresponding coordination mechanism, in push, pull and hybrid push-pull assembly supply chains, respectively.Firstly, in the push assembly supply chain, the assembler bears the inventory risk of all components. The dissertation supposes that all suppliers are more powerful than the assembler. The suppliers and the assembler make their optimal operational decisions by engaging in a two-stage Stackelberg game, where the suppliers are Stackelberg leaders and simultaneously choose their component wholesale prices in the first stage, and the assembler decides its order quantity of each component according to the wholesale prices and the market demand for the final product in the second stage. By using a backward manner, the dissertation derives the optimal wholesale price of each supplier and the optimal order quantity of the assembler in the decentralized setting. The dissertation analyzes the impact of the assembler’s equity holding on the optimal operational decision of each player, and finds that, the optimal order quantity of the assembler increases, as the equity holding of the assembler in any supplier increases. Moreover, the optimal expected profit of the decentralized supply chain is less than that of the centralized supply chain. To achieve a perfect coordination, it should introduce two traditional coordination policies between each supplier and the assembler.Secondly, in the pull assembly supply chain the suppliers bear the inventory risk of their own components. The dissertation supposes that the assembler is more powerful than all suppliers. The suppliers and the assembler make their optimal operational decisions by engaging in a two-stage Stackelberg game, where the assembler is a Stackelberg leader and provides a procurement price for each component in the first stage, and the suppliers simultaneously decide their production quantities according to the procurement prices and the market demand for the final product in the second stage. By using a backward manner, the dissertation derives the optimal operational decision of each player in the decentralized setting, and shows that, the optimal production quantity of each component increases, as the equity holding of the assembler in any supplier increases. Moreover, the finding shows that the double marginalization exists in the decentralized supply chain, and the assembler can develop a coordination mechanism by introducing a combined policy, and achieve a win-win result.Finally, in the hybrid push-pull assembly supply chain, the assembler bears the inventory risk of some components, while the risk of the remaining components are borne by the suppliers themselves. The dissertation supposes that the suppliers who bear no inventory risk, are more powerful than the assembler, while the remaining suppliers are less powerful than the assembler. The suppliers and the assembler make their optimal operational decisions by engaging in a three-stage Stackelberg game, where the more powerful suppliers are Stackelberg leaders and simultaneously decide their component wholesale prices in the first stage, the assembler decides the order quantity from the more powerful suppliers and provides component procurement prices for the less powerful suppliers in the second stage, the less powerful suppliers simultaneously make decisions on their production quantities in the last stage. The dissertation derives the optimal wholesale prices of the more powerful suppliers, and the optimal order quantity and the procurement prices of the assembler, as well as the optimal production quantity of the less powerful suppliers. The result shows that: the optimal production quantity of the supply chain system increases, as the assembler’s equity holdings in both the more powerful suppliers and the less powerful suppliers, increase. Moreover, the result shows that the double marginalization exists, not only between the more powerful suppliers and the assembler, but also between the less powerful suppliers and the assembler. To achieve supply chain coordination, it should introduce coordination policies not only between the more powerful suppliers and the assembler, but also between the less powerful suppliers and the assembler.