Portfolio strategies in supply contracts
Name
56430562-MIT.pdf
Description
Full printable version
Size
6.76 MB
Format
Adobe PDF
Checksum (MD5)
1b759dbc513cab6e5e6da7fb01e1b02b
Author(s)
Martínez-de-Albéniz, Victor, 1978-
Advisor(s)
David Simchi-Levi.
Date Issued
2004
Publisher
Massachusetts Institute of Technology
Abstract
Traditionally, industrial buyers have focused on long-term contracts for many of their purchasing needs. Recently, however, some high-tech manufacturers have started looking at more flexible contracts for non-strategic components, which enables them to buy from a variety of suppliers and the spot market. We study this type of strategies in a general framework for supply contracts, in which portfolios of contracts can be analyzed and optimized. We examine a multi-period model where expected profit is optimized, and a single-period model where a mean-variance objective is considered. In addition, we investigate what the consequences of such purchasing behavior might be. For this purpose, we study the game where suppliers compete on price and flexibility for the buyer's orders. We characterize the suppliers' Nash equilibria in pure strategies and show that, when demand is log-concave, there exists one or multiple equilibria, and that in any of these, suppliers bid in clusters against other suppliers with similar technologies.
Description
Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, Operations Research Center, 2004.
Includes bibliographical references (p. 235-239).
Subjects
Operations Research Center.
MIT Department
Massachusetts Institute of Technology. Operations Research Center
Sloan School of Management
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