Title: Quality control strategy in supply chain under asymmetric information

Authors: Cui-hua Zhang, Hai-bin Yu, Xiao-yuan Huang

Addresses: School of Business and Management, Northeastern University, Shenyang 110004, PR China. ' Shenyang Institute of Automation, Chinese Academy of Science, Shenyang 110016, PR China. ' School of Business and Management, Northeastern University, Shenyang 110004, PR China

Abstract: This paper is essentially concerned with the supplier and the buyer|s quality control decision in supply chain with asymmetric information. The paper presents principal-agent models regarding the buyer|s quality evaluation level and the supplier|s quality prevention level decision problems. The paper then focuses on the supplier and the buyer|s optimisation problems being turned into optimal control problems under asymmetric information. Maximal principle is used to get the solution. And comparison analyses are made between two different information settings. At last, numerical examples are presented to prove our models and analyses.

Keywords: asymmetric information; principal agent models; maximal principle; quality evaluation; quality prevention; transfer payment; supplier quality control; supply chain management; SCM; optimal control; buyer quality control; supply chain collaboration.

DOI: 10.1504/IJOR.2009.021620

International Journal of Operational Research, 2009 Vol.4 No.1, pp.97 - 116

Published online: 30 Nov 2008 *

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