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Soft Computing

, Volume 22, Issue 16, pp 5263–5278 | Cite as

Effect of risk attitude on outsourcing leadership preferences with demand uncertainty

  • Huiru Chen
  • Yingchen Yan
  • Zhibing Liu
  • Tiantian Xing
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Abstract

To maintain the competence, an increasing number of original equipment manufacturers (OEMs) outsource their production manufacturing to contract manufacturers (CMs). While the outsourcing strategy benefits the manufacturers greatly, it also brings huge risk derived from uncertain environment, which may directly affect the supply chain members’ competitive profits and then their leadership preferences in competition. To address this problem, this paper considers a model in which an OEM outsources its production partly to a competitive CM (CCM), who also sells her own products; moreover, they hold different risk attitudes toward the uncertain demand, characterized by the confidence level in the framework of uncertainty theory. Based on the framework, to explore the OEM’s and the CCM’s leadership preferences, we derive and compare the simultaneous game, the OEM-as-leader game and the CCM-as-leader game. We present an interesting insight that, with a high wholesale price, the leadership position is more attractive for a relatively risk-aversion OEM and a relatively risk-loving CCM, which demonstrates contrary effects of both one’s risk attitudes. Furthermore, we also find that both the OEM and the CCM would like to play the leadership when both the wholesale price and the outsourcing rate to the CCM is relatively low. However, in the case of a relatively high outsourcing rate and wholesale price, both parties would like to compromise to move last rather than sticking on moving first.

Keywords

Operation outsourcing Quantity leadership Risk attitude Confidence level Uncertainty environment 

Notes

Acknowledgements

This work is supported by the National Natural Science Foundation of China under Grant No. 71471126 and Hubei Province Natural Science Foundation of Key Project under Grant No. 2015CFA144.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.

Ethical approval

This article does not contain any studies with human or animal participants performed by any of the authors.

Informed consent

Informed consent is obtained from all individual participants included in the study.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Authors and Affiliations

  • Huiru Chen
    • 1
  • Yingchen Yan
    • 2
  • Zhibing Liu
    • 1
  • Tiantian Xing
    • 3
  1. 1.College of Mathematics and PhysicsHuanggang Normal UniversityHubeiChina
  2. 2.College of Management and EconomicsTianjin UniversityTianjinChina
  3. 3.Institute of Finance and BankingChinese Academy of Social SciencesBeijingChina

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