scholarly journals Supply Chain Control: A Theory of Vertical Integration

2015 ◽  
Vol 15 (4) ◽  
pp. 1831-1866 ◽  
Author(s):  
Giovanni Ursino
Keyword(s):  
Supply Chain ◽  
Production Process ◽  
Financial Development ◽  
Vertical Integration ◽  
Bargaining Power ◽  
Vertical Structure ◽  
Specific Investments ◽  
Bargaining Position ◽  
Technological Obsolescence ◽  
The Cost

Abstract Improving a company’s bargaining position is often cited as a chief motivation to vertically integrate with suppliers. This paper expands on that view in building a new theory of vertical integration. In my model firms integrate to gain bargaining power against other suppliers in the production process. The cost of integration is a loss of flexibility in choosing the most suitable suppliers for a particular final product. I show that the firms who make the most specific investments in the production process have the greatest incentive to integrate. The theory provides novel insights into the understanding of numerous stylized facts such as the effect of financial development on the vertical structure of firms, the observed pattern from FDI to outsourcing in international trade, and the effect of technological obsolescence on organizations.

scholarly journals Dinamika Perubahan Harga Padi Jagung Kedelai serta Implikasinya terhadap Pendapatan Usaha Tani

2019 ◽  
Vol 36 (1) ◽  
pp. 23
Author(s):  
Rizma Aldillah
Keyword(s):  
Supply Chain ◽  
Farm Income ◽  
Agricultural Activities ◽  
Trading System ◽  
Price Changes ◽  
Bargaining Position ◽  
The Cost ◽  
The Impact ◽  
Cost Components

<p>Price changes affect all aspects of agricultural activities, especially on agricultural development.To increase the production of strategic commodities such as rice, maize, and soybean, needs special attention to the impact of price changes closely related to that trading, so it is expected that the implications for farming income will be better and can make farmers more prosperous in the future. Often the fact, the growth in food demand is faster than the growth of its supply, causing changes in the price of staple foodstuffs, and ultimately impacting at the farmers income whose are uncertain. This paper aims to analyze the impact of changes in rice,maize and soybean prices on that trading, and its implications for farm income. The determination of the Reference Price of Purchase which only considers the cost of farming to produce rice, corn and soybean has not provided optimal support for efforts to increase the income of pajale farming. Therefore, it is necessary to consider all cost components, as well as government intervention in helping to strengthen the bargaining position of farmers in the trading system of these three commodities in Indonesia, so that the supply chain from farmers to the hands of end consumers can be cut, in order to provide direct implications for increased farm revenues.</p><p>Abstrak</p><p>Perubahan harga memengaruhi seluruh aspek kegiatan pertanian, khususnya terhadap pembangunan pertanian. Untuk meningkatkan produksi komoditas pangan utama, seperti padi, jagung, dan kedelai diperlukan perhatian khusus terhadap dampak perubahan harga yang berkaitan erat dengan perdagangannya sehingga diharapkan pendapatan usaha tani menjadi lebih baik dan petani makin sejahtera kedepannya. Seringkali faktanya bahwa pertumbuhan permintaan pangan lebih cepat dari pertumbuhan penyediaannya yang menyebabkan perubahan harga pangan pokok sering bergejolak dan akhirnya berdampak pada pendapatan petani yang tidak menentu. Tulisan ini bertujuan menganalisis dampak perubahan harga padi, jagung dan kedelai terhadap perdagangannya, serta implikasinya terhadap pendapatan usaha tani. Penetapan harga acuan pembelian (HAP) yang hanya mempertimbangkan biaya usaha tani untuk memproduksi padi, jagung dan kedelai belum memberikan dukungan yang optimal bagi upaya peningkatan pendapatan usaha tani pajale. Untuk itu, perlunya mempertimbangkan semua komponen biaya serta intervensi pemerintah dalam membantu memperkuat posisi tawar petani dalam sistem perdagangan ketiga komoditas tersebut di Indonesia sehingga rantai pasok dari petani ke tangan konsumen akhir dapat dipangkas dengan tujuan dapat memberikan implikasi secara langsung terhadap peningkatan pendapatan usaha tani.</p>

Impact of bargaining power on supply chain profit allocation: a game-theoretic study

2019 ◽  
Vol 16 (3) ◽  
pp. 398-416
Author(s):  
Sanjay Prasad ◽  
Ravi Shankar ◽  
Sreejit Roy
Keyword(s):  
Supply Chain ◽  
Bargaining Power ◽  
Supply Chain Coordination ◽  
Infinite Horizon ◽  
The Other ◽  
Future Research ◽  
Theoretic Approach ◽  
Content Type ◽  
Bargaining Position ◽  
The Impact

Purpose The purpose of this paper is to study the impact of bargaining powers of firms in supply chain coordination. It studies selected aspects of bargaining powers, namely, impatience, breakdown probability and outside options, and uses a bargaining-theoretic approach to analyze surplus allocation in a coordinated supply chain. Design/methodology/approach This paper proposes one-supplier one-buyer infinite horizon supply chain coordination game, where suppliers and buyers negotiate for the allocation of supply chain surplus arising out of supply chain coordination. Various aspects of the bargaining power of the negotiating parties are modeled and the paper studies impact of power levels on the results of the bargaining game. Findings A significance of impatience on the bargaining process and the surplus split has been established. This paper also demonstrates a rather counter-intuitive aspect of bargaining that the impatience (as perceived by the other party) can improve the bargaining position and therefore share of profits. Research limitations/implications This paper has limited its analysis to three key components of bargaining power. Future works can study other aspects of bargaining power, namely information asymmetry, learning curve, inside options, etc. Further, the paper has considered an infinite horizon model – this assumption can be relaxed in future research. Practical implications Equations to derive optimal split of the surplus have been derived and can be leveraged to design an autonomous bargaining agent to discover equilibrium profit splits in a cloud or e-commerce setting. Further, insights from this paper can be leveraged by managers to understand their relative bargaining power and drive to obtain the best profit split. Originality/value This paper establishes that impatience (in terms of counter-offer probability) has a significant impact on the bargaining position and on the split of the surplus that the firm can get for themselves. It establishes the advantage of higher levels of impatience, provided the other party recognizes the impatience and factors it in their decision-making process.

Capital Structure Along the Supply Chain: How Does Customer Leverage Affect Supplier Leverage Decisions?

2017 ◽  
Vol 07 (04) ◽  
pp. 1750014
Author(s):  
Yongqiang Chu ◽  
Liying Wang
Keyword(s):  
Supply Chain ◽  
Capital Structure ◽  
Bargaining Power ◽  
Customer Relationship ◽  
Bargaining Theory ◽  
Specific Investment ◽  
Investment Theory ◽  
Specific Investments ◽  
Ex Ante ◽  
The Relationship

The bargaining theory of capital structure implies that when firms raise their leverage, their suppliers will raise their own leverage in response, so as to maintain strength in negotiations with important customers. In contrast, the theory of firm-specific investments implies that when a customer raises its leverage, a firm will respond by lowering its own leverage to minimize the risk of bankruptcy. We test these theories by examining the relationship between the leverage decisions of suppliers and customers. We find that a firm’s leverage is positively associated with its customer’s leverage. Moreover, consistent with the bargaining theory, we find that the positive leverage relationship is stronger if the customer has a higher ex-ante bargaining power. We also find some support for the relation-specific investment theory of capital structure in that the positive leverage relationship is weaker if the supplier–customer relationship requires more relation-specific investments.

IMPLEMENTASI JOB ORDER COSTING METHOD DALAM PERHITUNGAN HARGA POKOK PRODUKSI MAP

2018 ◽  
Vol 4 (2) ◽  
pp. 43-55
Author(s):  
Ika Yulianti ◽  
Endah Masrunik ◽  
Anam Miftakhul Huda ◽  
Diana Elvianita
Keyword(s):  
Production Process ◽  
Quantitative Data ◽  
Production Cost ◽  
Qualitative Data ◽  
Cost Data ◽  
Method Calculation ◽  
Cost Of Production ◽  
The Right ◽  
The Cost

This study aims to find a comparison of the calculation of the cost of goods manufactured in the CV. Mitra Setia Blitar uses the company's method and uses the Job Order Costing (JOC) method. The method used in this study is quantitative. The types of data used are quantitative and qualitative. Quantitative data is in the form of map production cost data while qualitative data is in the form of information about map production process. The result of calculating the cost of production of the map between the two methods results in a difference of Rp. 306. Calculation using the company method is more expensive than using the Job Order Costing method. Calculation of cost of goods manufactured using the company method is Rp. 2,205,000, - or Rp. 2,205, - each unit. While using the Job Order Costing (JOC) method is Rp. 1,899,000, - or Rp 1,899, - each unit. So that the right method used in calculating the cost of production is the Job Order Costing (JOC) method

Inventory optimization considering the vehicle capacity and specifics of cash flows at rental storage sites

2020 ◽  
pp. 77-90
Author(s):  
V.D. Gerami ◽  
I.G. Shidlovskii
Keyword(s):  
Supply Chain ◽  
Inventory Management ◽  
Sufficient Conditions ◽  
Cash Flows ◽  
Management Systems ◽  
Cargo Capacity ◽  
Special Modification ◽  
The Cost ◽  
Necessary And Sufficient ◽  
Vehicle Capacity

The article presents a special modification of the EOQ formula and its application to the accounting of the cargo capacity factor for the relevant procedures for optimizing deliveries when renting storage facilities. The specified development will allow managers to take into account the following process specifics in the format of a simulated supply chain when managing inventory. First of all, it will allow considering the most important factor of cargo capacity when optimizing stocks. Moreover, this formula will make it possible to find the optimal strategy for the supply of goods if, also, it is necessary to take into account the combined effect of several factors necessary for practice, which will undoubtedly affect decision-making procedures. Here we are talking about the need for additional consideration of the following essential attributes of the simulated cash flow of the supply chain: 1) time value of money; 2) deferral of payment of the cost of the order; 3) pre-agreed allowable delays in the receipt of revenue from goods sold. Developed analysis and optimization procedures have been implemented to models of this type that are interesting and important for a business. This — inventory management systems, the format of which is related to the special concept of efficient supply. We are talking about models where the presence of the specified delays for the outgoing cash flows allows you to pay for the order and the corresponding costs of the supply chain from the corresponding revenue on the re-order interval. Accordingly, the necessary and sufficient conditions are established based on which managers will be able to identify models of the specified type. The purpose of the article is to draw the attention of managers to real opportunities to improve the efficiency of inventory management systems by taking into account these factors for a simulated supply chain.

A study of cane supply benefits associated with ad hoc mechanical harvesting to mitigate cutter absenteeism

2013 ◽  
pp. 532-538 ◽  
Author(s):  
Muhammad Kadwa ◽  
Carel N Bezuidenhout
Keyword(s):  
Supply Chain ◽  
South African ◽  
Ad Hoc ◽  
Sugar Mill ◽  
The South ◽  
Optimum Performance ◽  
Kwazulu Natal ◽  
Cane Quality ◽  
The Cost

The Eston Sugar Mill is the newest in the South African KwaZulu-Natal sugar belt. Like most other mills, it can be argued that there are inefficiencies in the supply chain due to systematic issues, which reduce optimum performance. It was alleged that mill processes are slowed, or stopped, on Sundays, Mondays, as well as some Tuesdays and Wednesdays, due to pay-weekends, because of the associated cutter absenteeism. This increases the length of the milling season (LOMS), increases milling costs and reduces the average cane quality for the season. Data on cane deliveries to the Eston Mill, over a period of five seasons, were analysed to study the magnitude of the problem. It was statistically verified that cane shortages occur immediately after payweekends and it was conservatively estimated that cutter absenteeism occurs between 25–29 days per season, which increases the LOMS by six to ten days. The associated cost of this problem equated to an average of US$159,500 (approximately EUR120,000) per milling season. In this paper, an alternative harvesting system scenario is suggested, assuming that mechanical harvesters be used after a pay-weekend, to mitigate the impacts of cutter shortages. However, the solution is calculated to be risky. When the cost of new equipment was considered, only two of the five seasons were able to justify the associated costs.

Investments and Risk Transfers

2017 ◽  
Vol 92 (6) ◽  
pp. 1-23 ◽  
Author(s):  
Tim Baldenius ◽  
Beatrice Michaeli
Keyword(s):  
Moral Hazard ◽  
Risk Premium ◽  
Bargaining Power ◽  
Risk Premia ◽  
The Other ◽  
Investment Risk ◽  
Incomplete Contracting ◽  
Risk Transfer ◽  
Specific Investments ◽  
Division Managers

ABSTRACT We demonstrate a novel link between relationship-specific investments and risk in a setting where division managers operate under moral hazard and collaborate on joint projects. Specific investments increase efficiency at the margin. This expands the scale of operations and thereby adds to the compensation risk borne by the managers. Accounting for this investment/risk link overturns key findings from prior incomplete contracting studies. We find that if the investing manager has full bargaining power vis-à-vis the other manager, he will underinvest relative to the benchmark of contractible investments; with equal bargaining power, however, he may overinvest. The reason is that the investing manager internalizes only his own share of the investment-induced risk premium (we label this a “risk transfer”), whereas the principal internalizes both managers' incremental risk premia. We show that high pay-performance sensitivity (PPS) reduces the managers' incentives to invest in relationship-specific assets. The optimal PPS, thus, trades off investment and effort incentives.

scholarly journals Evaluating the Economic Viability of Agricultural Pellets to Supplement the Current Global Wood Pellets Supply for Bioenergy Production

Energies ◽  
2021 ◽  
Vol 14 (8) ◽  
pp. 2263
Author(s):  
Mahmood Ebadian ◽  
Shahab Sokhansanj ◽  
David Lee ◽  
Alyssa Klein ◽  
Lawrence Townley-Smith
Keyword(s):  
Supply Chain ◽  
Western Europe ◽  
Small Scale ◽  
Economic Activities ◽  
Wood Pellets ◽  
Logistics System ◽  
Global Marketplace ◽  
Biomass Logistics ◽  
Production And Distribution ◽  
The Cost

In this study, an inter-continental agricultural pellet supply chain is modeled, and the production cost and price of agricultural pellets are estimated and compared against the recent cost and price of wood pellets in the global marketplace. The inter-continental supply chain is verified and validated using an integration of an interactive mapping application and a simulation platform. The integrated model is applied to a case study in which agricultural pellets are produced in six locations in Canada and shipped and discharged at the three major ports in Western Europe. The cost of agricultural pellets in the six locations is estimated to be in the range of EUR 92–95/tonne (CAD 138–142/tonne), which is comparable with the recent cost of wood pellets produced in small-scale pellet plants (EUR 99–109/tonne). The average agricultural pellet price shipped from the six plants to the three ports in Western Europe is estimated to be in a range of EUR 183–204 (CAD 274–305/tonne), 29–42% more expensive that the average recent price of wood pellets (EUR 143/tonne) at the same ports. There are several potential areas in the agricultural pellet supply chains that can reduce the pellet production and distribution costs in the mid and long terms, making them affordable supplement to the existing wood pellet markets. Potential economic activities generated by the production of pellets in farm communities can be significant. The generated annual revenue in the biomass logistics system in all six locations is estimated to be about CAD 21.80 million. In addition, the logistics equipment fleet needs 176 local operators with a potential annual income of CAD 2.18 million.

scholarly journals Bargaining power as moderator of the “delay costs effect” in supply chain negotiations

2021 ◽  
Vol 51 ◽  
pp. 100737
Author(s):  
Susana Gago-Rodríguez ◽  
Gilberto Márquez-Illescas ◽  
Manuel Núñez-Nickel
Keyword(s):  
Supply Chain ◽  
Bargaining Power
Sign in / Sign up

Export Citation Format

Share Document