Response time and vendor-assembler relationship in a supply chain

Seongje Ahn, Hosun Rhim, S. Hun Seog

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


Relationships between an assembler and a vendor in a supply chain are investigated in two-period models when the assembler wants to reduce response time by incentive systems. The assembler may offer myopic or farsighted incentive contracts to the vendor, under short-term or long-term relationships. Incentive schemes, effort levels, and expected payoffs under different perspectives and relationships are examined. We find that a farsighted assembler provides the vendor with a higher incentive than a myopic assembler in the first period. A long (short)-term relationship is preferred if the value of farsightedness under a long-term relationship is greater (less) than the switching option value under a short-term relationship. We propose several sufficient conditions regarding which perspectives and relationships are preferred.

Original languageEnglish
Pages (from-to)652-666
Number of pages15
JournalEuropean Journal of Operational Research
Issue number2
StatePublished - 16 Jan 2008


  • Contract
  • Incentive scheme
  • Long-term and short-term relationships
  • Response time
  • Supply chain management


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