Relational Supply Contracts: Optimal Concessions in Return Policies for Continuous Quality Improvements (Lecture Notes in Economics and Mathematical Systems (629))

Supply relations are often governed by so-called relational contracts. These are informal agreements sustained by the value of future cooperation. Although relational contracts persist in practice, research on these types of contracts is only emerging in Operations and Supply Chain Management. This book studies a two-firm supply chain, where repeated transactions via well-established supply contracts and continued quality-improvement efforts are governed by a relational contract. We are able to characterize an optimal relational contract, i.e., to develop policies for supplier and buyer that structure investments in quality and flexibility in a way that no other self-enforcing contract generates higher expected joint surplus. A second goal is to compare the performance of different returns mechanisms in the context of relational contracting (quantity flexibility and buy-back contracts). Industry studies motivate the presented model. Supply Relations Are Often Governed By So-called Relational Contracts. These Are Informal Agreements Sustained By The Value Of Future Cooperation. Although Relational Contracts Persist In Practice, Research On These Types Of Contract Is Only Emerging In Operations And Supply Chain Management. This Book Studies A Two-firm Supply Chain, Where Repeated Transactions Via Well-established Supply Contracts And Continued Quality-improvement Efforts Are Governed By A Relational Contract. We Are Able To Characterize An Optimal Relational Contract, I.e., To Develop Policies For Supplier And Buyer That Structure Investments In Quality And Flexibility In A Way That No Other Self-enforcing Contract Generates Higher Expected Joint Surplus. A Second Goal Is To Compare The Performance Of Different Returns Mechanisms In The Context Of Relational Contracting (quantity Flexibility And Buy-back Contracts). Industry Studies Motivate The Presented Model. Michaela Isabel Höhn. Includes Bibliographical References (p. 111-118) And Index. Front Matter....Pages 1-14 Introduction....Pages 1-17 Literature Review on Supply Chain Contracts....Pages 19-34 Relational Contracts....Pages 35-54 Relational Contracts and Optimal Quantity Flexibility....Pages 55-75 Relational Contracts and Optimal Buy-Back Price....Pages 77-88 QF vs. Buy-Back Contract in Buyer-Supplier Relationships....Pages 89-102 Case Study: Supplier Relationship Management at Volkswagen Group....Pages 103-108 Conclusion and Outlook....Pages 109-110 Back Matter....Pages 1-11