Study On The Optimization And Sharing Strategy Of The Defective Product Recall Costs

In recent years, product quality had more and more significant impact on the brand. Quality management had been one of the most important part to enterprise management. Product recall caused by defective quality would impose an enormous risk upon firms. As companies outsource more product design and manufacturing activities to other members of the supply chain, improving end-product quality has become an endeavor extending beyond the boundaries of the firms'in-house process capabilities. It is also becoming a common practice among manufacturers to present suppliers with quality cost sharing agreements to ensure accountability of quality problems and to create incentives for process improvement. Therefore, researching the optimization and sharing strategy of the defective product recall costs had great academic and applied significance.There were not so many related literatures about defective products recall problems, especially in terms of the quantitative models papers. After giving a detailed and extensive literature review in Chapter 2, based on the finite source queuing theory and the supermodular game theory, we deeply analyzed the subject that the optimization and sharing strategy of the defective product recall costs problem.Caption 3 discusses the optimal allocation of repair shops in the defective automobile products recall. Supposing that the manufacturers repair nearly all of the automotives in the recall period, the sojourn time and the repair time both are exponentially distributed, the repairman will automatically adjust the repairing speed according to the number of return automotive in the system. We take the number of agent repair shops as the control policy, and establish a costs control model by using finite source queuing theory. The search algorithm determines the optimal number of repair shops, such that the expected total costs are minimized.Caption 4 discusses the cost-sharing and quality-improvement incentives in the product recall. By introducing the root cause analysis cost-sharing contract, assumed that the manufacturer and supplier face the linear market demand, and all of the two firms could make the efforts improve product quality, the optimal Nash Equilibrium existence in the decentralized supply chain had been proved by using insights from supermodular game theory. Under the root cause analysis cost-sharing contract, the product quality, quality improvement efforts, retail price and wholesale price, product market share all obtained to first best level, their own profits had also been maximized. And in the case that when the cost of root cause analysis can be ignored, the supply chain is coordinated.Finally, we demonstrate that our study had improved the relevant theory's research, and could help the decision-maker and managers formulate the best recalled strategy, optimize and share the costs of recalls, improve the revenue of the firms.