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SHORT‐TERM E‐PROCUREMENT STRATEGIES VERSUS LONG‐TERM CONTRACTS
Author(s) -
PELEG BARCHI,
LEE HAU L.,
HAUSMAN WARREN H.
Publication year - 2002
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2002.tb00472.x
Subject(s) - procurement , term (time) , general partnership , business , microeconomics , industrial organization , strategic dominance , operations research , operations management , computer science , economics , marketing , finance , physics , quantum mechanics , engineering
In this paper we compare the following procurement strategies based on their expected costs: strategic partnership, which is based on a long‐term relationship with a single supplier; online search, which is a short‐term strategy; and a combined strategy, which is some combination of the first two strategies. In addition, we determine for the online search and combined strategy the optimal number of suppliers to contact for a price quote, and analyze how it depends on the various cost and demand parameters. The main contribution of this paper is that it does not assume a single procurement strategy, but rather compares three alternatives.