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Authors:
Kristian Strmenik
Christian Mitsch
Friederike Wall
Gernot Moedritscher
Keywords: Multiple-sourcing strategy; Buyer-supplier network; Volume allocation; Temporal difference learning
Abstract:
In this paper, a buyer-supplier network is considered, which consists of a buyer and several suppliers who differ from each other in terms of quality and price. A buyer who puts its focus solely on quality pursues a different strategy than a price sensitive buyer, and, hence, allocates the procurement volume of a product in a different way among the suppliers, which in turn affects the supplier structure. Besides the buyer’s strategic considerations, the suppliers also try to act strategically to maintain their competitiveness. We apply an agent-based simulation to analyze how different procurement volumes and levels of precision of the buyer’s quality measurement system affect the supplier structure when (1) the suppliers’ qualities and prices are modeled by generalized logistic functions and log-linear models, respectively, (2) the buyer uses a proportional volume allocation rule to allocate its procurement volume among the suppliers, and (3) the buyer learns its own quality-price preference via temporal difference learning. In order to express the buyer’s quality-price preference, we apply an additive weighted sum model. The results show that, for low (high) procurement volumes, the buyer learns that sourcing from suppliers who pursue a high-quality (low-cost) leadership strategy leads to a more profitable supplier structure. But if the buyer’s precision of quality measurement system decreases, these suppliers are not able to continue their position in the market and, therefore, lose market shares to suppliers who focus on a different competitive strategy.
Pages: 86 to 94
Copyright: Copyright (c) IARIA, 2021
Publication date: October 3, 2021
Published in: conference
ISSN: 2308-4537
ISBN: 978-1-61208-898-3
Location: Barcelona, Spain
Dates: from October 3, 2021 to October 7, 2021