Seminar: The Comparison of Two Vertical Outsourcing Structures under Push and Pull Contracts


Department of Systems Engineering and Engineering Management
The Chinese University of Hong Kong

Title: The Comparison of Two Vertical Outsourcing Structures under Push and Pull Contracts

Speaker: Prof. Amanda Yulan WANG
               Institute of Textiles and Clothing
               Hong Kong Polytechnic University

Date: Jun 11, 2012 (Monday)

Time : 11:15 a.m. - 12:30 p.m.

Venue: Room 513
            William M.W. Mong Engineering Building
            (Engineering Building Complex Phase 2)


In a three-tier supply chain comprising an original equipment manufacturer (OEM), a  contract manufacturer (CM) and a supplier, there exist two typical outsourcing structures:  control and delegation. Under the control structure, the OEM contracts with the CM and  the supplier respectively. Under the delegation structure, the OEM contracts with the CM only and the CM subcontracts with the supplier. We compare the two outsourcing structures under a push contract (whereby orders are placed before demand is realized) and a pull contract (whereby orders are placed after demand is realized). For all combinations of outsourcing structures and contracts, we derive the corresponding equilibrium wholesale prices, order quantities and capacities. We find that the equilibrium production quantity is higher under  control than under delegation for the push contract whereas the reverse holds for the pull contract. Both the OEM and the CM prefer control over delegation under the push contract.
However, under the pull contract, the OEM prefers control over delegation whereas the CM and the supplier prefer delegation over control. We also show that for a given  outsourcing structure, the OEM prefers the pull contract over the push contract. In extending  our settings to a general two-wholesale-price (TWP) contract, we find that when wholesale prices are endogenized decision variables, the TWP contract under our setting degenerates to
either a push or a pull contract.


Dr Yulan Wang received her Ph.D degree in Business Administration from Duke University in 2006. She obtained her BS degree in 1997 and MS degree in 2000, both from Shanghai Jiao Tong University.  Her research work has been published in leading academic journals such as Management Science, Operations Research, Production and Operations Management, European Journal of Operational Research, Operations Research Letters and others. She has been awarded with two GRF grants in the last two years from RGC in Hong Kong.  She teaches courses such as Supply Chain Management, International Operations Management and Sourcing and Logistics, at both
undergraduate and graduate levels. Dr Wang's research interests include supply chain management, manufacturing-marketing interface and retail assortment.


************************* ALL ARE WELCOME ************************
Host : Prof. Duan Li

Tel: (852) 3943-8316/8323


Enquiries: Prof. Nan Chen or Prof. Sean X. Zhou
                 Department of Systems Engineering and Engineering Management

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Monday, June 11, 2012 - 03:15 to 04:30