| dc.description.abstract | Management of electronics supply chains has become increasingly complicated due to both a rising dependence on Contract Electronics Manufacturers (CEMs) and the increased dominance of retailing giants. This paper analyzes the effects of different leadership structures on the relative profit of each member of a three-tier electronics supply chain that consists of a CEM, an Original Equipment Manufacturer (OEM), and a Retailer. Our decentralized supply chain setting is governed by a wholesale price contract, and we assume that each supply chain member faces an increasing marginal unit cost function. We conduct a comparative analysis with a centralized supply chain (i.e., a vertically integrated company with business divisions acting as CEM, OEM, and Retailer). Three different demand functions are considered: linear, exponential, and stochastic. Our results show that supply chains in which the Retailer acts as the Stackelberg leader have the highest optimum profit regardless of the demand function. Results also show that the allocation of unit cost between the CEM, OEM and Retailer affects the profit distribution profile. Finally, we also study the effectiveness of demand disruption management in the decentralized supply chain setting where the OEM is the leader. A penalty cost is incurred by the Retailer when a demand disruption occurs, i.e. when actual demand deviates from the original forecast. We find exact analytical solutions of the effectiveness of managing disruptions when the consumer demand is linear, and we provide numerical examples as an illustration when the consumer demand is either linear or exponential. | |
