Search results

1 – 1 of 1
Per page
102050
Citations:
Loading...
Access Restricted. View access options
Article
Publication date: 29 April 2021

Suyuan Wang, Huaming Song and Canran Gong

Companies face the critical reliability problem of products due to the development of outsourcing. This study intends to provide some feasible solutions for a company to improve…

262

Abstract

Purpose

Companies face the critical reliability problem of products due to the development of outsourcing. This study intends to provide some feasible solutions for a company to improve the reliability level of products.

Design/methodology/approach

The paper considers the reward and reliability decisions regarding a product made with two complementary components from two different suppliers: high-capable and low-capable. Two kinds of reliability improvement incentives (normal incentive and cost-sharing incentive) through which a manufacturer provides a reward and shares the reliability improvement cost with a supplier are discussed. As the Stackelberg leader, the manufacturer determines the strategy, while the suppliers are responsible for determining its reliability. Using a game-theoretic framework, four different contract scenarios are addressed. We develop analytical methods to better understand how the manufacturer decides the incentive mechanism to be used for the suppliers.

Findings

The results show that cost-sharing contracts do not always lead to a higher reliability level and more enormous profits. Setting a target reliability level is better for the manufacturer. The cost-sharing contract is beneficial for a high-capable supplier even though it does not directly participate in that kind of mechanism. A low-capable supplier gains more profit when the manufacturer provides incentive mechanisms that do not specify a target reliability level.

Originality/value

This paper investigates the reliability improvement mechanism used for complementary products and focuses on identifying the optimal decisions when demand is influenced by the gap between the product's failure rate and the standard failure rate.

Details

The TQM Journal, vol. 33 no. 8
Type: Research Article
ISSN: 1754-2731

Keywords

1 – 1 of 1
Per page
102050