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Chinese Journal of Management Science ›› 2014, Vol. 22 ›› Issue (3): 90-95.

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Study on the Quality-Coordination Contract of Manufacturing Supply Chain under Double Moral Hazard

SHEN Qiang1, HOU Yun-xian2, YANG Wei-min1   

  1. 1. College of Urban & Rual Development, Beijing University of Agriaulture, Beijing 102206, China;
    2. College of Economics and Management, China Agriaultural University, Beijing 100083, China
  • Received:2011-08-17 Revised:2013-05-08 Online:2014-03-20 Published:2014-03-19

Abstract: Fairness is the effectiveness premise of the contract, and also the guarantee of coordination improvement of a supply chain. Considering the influence of market change on the contract's fairness, in this paper, considering double moral hazard, a quality control game model for a manufacturing supply chain based on the Principal-agent theory, and the quality-control levels of the supplier and manufacture both which have quality failures are analyzed. How the change of the market and quality cost impact on the fairness and effectiveness of the contracts is also studied. The result shows after the simulation verification, the accuracy of investigation technology affects the fairness and effectiveness of external loss sharing contracts directly while is invalid on the internal punishment contracts. The external loss sharing model will coordinate the supply chain only when the supplier does not have to be responsible for the manufacturers' to failure. The effects of internal punishment contracts will be higher than the external loss sharing contracts with the increase of the supplier's quality-control costs, while the external loss sharing contract will be more effective with the decrease of the manufacturer's quality-control costs. So, to realize the quality coordination in a supply chain, fairness of the contract is underlying premise and should be first.

Key words: double moral hazard, quality-control, external lose sharing contract, internal punishment contract

CLC Number: