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http://bura.brunel.ac.uk/handle/2438/25183
Title: | Supplier bottleneck and information dissemination |
Authors: | Li, M Li, Y Zhang, Y |
Keywords: | complementary suppliers;newsvendor;behavioral operations;information dissemination |
Issue Date: | 14-Feb-2023 |
Publisher: | Wiley on behalf of Association for Supply Chain Management |
Citation: | Li, M., Li, Y, and Zhang, Y. (2022) 'Supplier bottleneck and information dissemination', Journal of Operations Management, 69 (4), pp. 558 - 585. doi: 10.1002/joom.1239. |
Abstract: | Copyright © 2023 The Authors. This paper investigates the capacity decisions of complementary suppliers who produce different components of a final product. The suppliers solicit private forecast information from a buyer who has more precise information regarding the market as compared to the suppliers. In this context, the lowest capacity built among suppliers—termed as effective capacity—represents the bottleneck of a supply chain, which in turn determines the throughput of the entire channel. The standard analysis based on full rationality posits that the capacity decisions of suppliers are based on their prior belief of demand, with no consideration of the buyer's information dissemination or the number of peer suppliers. We test the predictions experimentally, and our laboratory observations reject the prediction of rational model. Then, we develop a behavioral model based on suppliers' heterogeneity in the processing of demand information provided by the buyer. Our behavioral model indicates that suppliers lower their capacity levels when the number of suppliers increases, thereby exacerbating the supplier bottleneck. While the buyer may exaggerate the market demand to ensure abundant supply, interestingly, the inflation can benefit suppliers by increasing their capacity levels. In this manner, the inflation of the buyer can serve to mitigate the supplier bottleneck, thereby resulting in a win–win outcome for both the suppliers and the buyer. |
Description: | Supporting Information is available online at https://onlinelibrary.wiley.com/doi/10.1002/joom.1239#support-information-section . |
URI: | https://bura.brunel.ac.uk/handle/2438/25183 |
DOI: | https://doi.org/10.1002/joom.1239 |
ISSN: | 0272-6963 |
Other Identifiers: | ORCID iD: Meng Li https://orcid.org/0000-0002-8476-2189 ORCID iD: Yang Zhang https://orcid.org/0000-0002-1534-010X |
Appears in Collections: | Brunel Business School Research Papers |
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FullText.pdf | Copyright © 2023 The Authors. Journal of Operations Management published by Wiley Periodicals LLC on behalf of Association for Supply Chain Management, Inc. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License (https://creativecommons.org/licenses/by-nc/4.0/), which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes. | 3.3 MB | Adobe PDF | View/Open |
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