Contract design for the fourth party logistics considering tardiness risk

Nowadays, tardiness has become a significant risk in the logistics industry. To address this problem, we introduce the tardiness risk index to quantify both the magnitude of the tardiness risk and the maximum probability of tardiness occurring. In this paper, we investigate the contract design problem with the tardiness risk index to mitigate the tardiness risk when a fourth-party logistics company (4PL) delegates the delivery task of a client to a third-party logistics company (3PL). Specifically, the contracts are designed in a decentralized system with information symmetry and information asymmetry when 3PL is risk neutral and risk averse. Furthermore, the incentive problems demonstrated that the 3PL is encouraged to make the optimal effort for delivery and the 4PL determines the optimal fixed payment and penalty coefficient. Through analyzing the experimental simulation results, we can find that the contract can effectively mitigate the tardiness risk and the maximum probability of risk occurrence.

Adaptation, adjudication, and private ordering: Contractual Relations through the Williamson Lens

Williamson's legacy will be permanently, and deservedly, linked with the theory of the firm. As important, however, is his contribution to our understanding of contracting. My aim here is to describe Williamson's conception of contracting, how it differs from other approaches to contracting, and some implications of that approach for contract design and enforcement. I argue that Williamson's ‘process orientation’ – in which the main dimension along which contracts vary is the extent to which contract adjustments are effected through court ordering versus private ordering – provides alternative interpretations of some conventional contract terms but also sheds light on some otherwise puzzling contractual phenomena.