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Organizational Behavior and Theory
University of Massachusetts Boston
Management Science and Information Systems Faculty Publication Series
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An Experimental Investigation Of Outsourcing Through Competition, Ehsan Elahi, Roger Blake
An Experimental Investigation Of Outsourcing Through Competition, Ehsan Elahi, Roger Blake
Management Science and Information Systems Faculty Publication Series
Our research uses laboratory experiments to examine the theoretical results of competition between suppliers in an outsourcing setup. We consider a supply chain in which a single buyer needs to outsource the manufacturing of a product among N potential suppliers. The buyer allocates demand to suppliers not on the basis of price, but rather on service. We analyze the levels of service suppliers will decide to provide when competing on three different criteria specified by the buyer. For the first, suppliers compete by providing the buyer a specific service level (fill-rate), and for the second by maintaining a specific quantity …