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Delegation with buy-back contract in a fashion supply chain under demand uncertainty

机译：需求不确定下时尚供应链中的回购合同委托

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We consider a three-tier supply chain with an original equipment manufacturer (OEM, the fashion brand), a contract manufacturer (CM), and a material supplier. There exist two typical outsource structures: control and delegation, where control refers to that the OEM only outsources products production to the CM, while delegation refers to that the OEM outsources both products production and materials procurement to the CM. Under delegation, buy-back contract is commonly adopted, where the OEM can return the unsold products to the CM at the end of selling season, shifting part of overstock risk to the CM. We find that with wholesale price, control is always more beneficial than delegation to the OEM. However, delegation with buy-back contract might benefit the OEM. We identify a demand enlargement effect, a wholesale complementary effect and a wholesale substitution effect of the buy-back price. We find that these three effects influence the OEM's preference over control and delegation. We further study the impact of demand uncertainty on the OEM's preference. We find that when demand uncertainty is relatively high and buy-back price is moderate, delegation dominates control.
机译：我们考虑由原始设备制造商（OEM，时尚品牌），合同制造商（CM）和材料供应商组成的三级供应链。存在两种典型的外包结构：控制和委派，控制是指OEM只将产品生产外包给CM，而委派是指OEM将产品生产和材料采购都外包给CM。根据授权，回购合同通常被采用，OEM可以在销售旺季结束时将未售出的产品退还给CM，从而将部分积压的风险转移给CM。我们发现，以批发价计算，控制总是比委托给OEM更有好处。但是，具有回购合同的委派可能会使OEM受益。我们确定回购价格的需求扩大效应，批发互补效应和批发替代效应。我们发现这三个影响会影响OEM对控制和委派的偏好。我们进一步研究需求不确定性对OEM偏好的影响。我们发现，当需求不确定性相对较高且回购价格适中时，委托将主导控制权。

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