Stable Group Purchasing Organizations

Nagarajan, Mahesh; Sošić, Greys; Zhang, Hao

doi:10.2139/ssrn.1138918

Cited by 30 publications

(24 citation statements)

References 29 publications

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“…Nagarajan et al (2009) compare some of the well-known allocations for dividing the joint costs in such situations. Schotanus et al (2008) discuss the unfairness of the equal price allocation method in purchasing groups.…”

Section: Literature Reviewmentioning

confidence: 99%

Collaborative replenishment in the presence of intermediaries

Hezarkhani

Slikker

Woensel

2018

European Journal of Operational Research

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In complex supply chains, individual downstream buyers would often rather replenish from intermediaries than directly from manufacturers. Direct replenishment from manufacturers can be a less costly alternative when carried out by the buyers collaboratively. This paper constructs a general model to study collaborative replenishment in multi-product supply chains in the presence of intermediaries. We introduce a class of associated cooperative games, outline a sufficient condition for their stability, and formulate a lower bound for individual allocations in the core. Drawing upon a class of associated two-stage games, we investigate the choice of allocation rule and its effect on the individuals' strategic decisions about participation in the collaborative organization. We prove that the Shapley value coordinates the supply chain as it makes complete participation the best individual choice for all buyers under complete or incomplete information. We show if the collaborative organization disregards the replenishment options from the intermediaries, so that they would be handled individually, no allocation rule could always coordinate the supply chain.

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Section: Literature Reviewmentioning

confidence: 99%

Collaborative replenishment in the presence of intermediaries

Hezarkhani

Slikker

Woensel

2018

European Journal of Operational Research

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“…For example, it has long been used in airline alliances, where total revenue from a connecting itinerary is often divided proportionally to local fares (see, e.g., Netessine and Shumsky 2005, Wright et al 2010, Hu et al 2013). In group purchasing games, coordinating buyers may also split the total purchasing cost proportionally to their individual order quantities (see, e.g., Chen and Yin 2010, Nagarajan et al 2010). In our model, suppliers set wholesale prices, and the components are complementary.…”

Section: Model Analysismentioning

confidence: 99%

Joint Selling of Complementary Components Under Brand and Retail Competition

Yin

2015

M&SOM

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Suppliers of complementary goods often package their items together when selling to downstream retailers. One motivation behind this behavior is to reduce double marginalization through coordinated pricing so that system efficiency is improved and individual members can also benefit. The objective of this paper is to understand how competition in supply chains would impact such joint selling partnerships among complementary suppliers. We first model competition at the supply level, which is generated from the existence of multiple partially substitutable brands (or suppliers) for a particular component. We then extend the analysis to a model that also involves retail competition caused by decentralization among retailers who assemble suppliers' components into final products and sell to customers. The analysis of a model with two complementary components, one of which has multiple brands, indicates that the supply-level competition discourages joint selling of complementary goods. That is, when competing brands become more alike (or substitutable), complementary suppliers act more independently in pricing and selling their items. However, retail competition leads to an opposite effect: Competition among retailers would actually encourage complementary suppliers to package their goods together and act jointly.

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“…Equal pricing policy ignores the marginal contribution of each member to other members of the purchasing group [22] and the policy may allocate the largest share of consortium savings to members with the least leverage [9]. Nagarajan, Sosic, and Zhang [16] suggest allocating the gains on the basis of the marginal value of a member's contribution when facing heterogeneous contributions in a purchasing consortium. Game theoretic concepts, such as compromise value, should be preferred as they give reasonable solutions to this allocation problem [9].…”

Section: Stability Of Gposmentioning

confidence: 99%

A Research Agenda for Emerging Roles of Healthcare GPOs and Their Evolution from Group Purchasing to Information Sharing to Strategic Consulting

Saha

Tilson

2010

2010 43rd Hawaii International Conference on System Sciences

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The Group Purchasing Organizations (GPOs) facilitate group buying on a large scale by aggregating the demands of several buyers. The GPO negotiates a lower purchase price with the seller by using the collective purchasing power of the buyers and lowers the buyers' procurement cost further by reducing the unit search costs and the unit transaction costs through scale. The role of healthcare GPOs has evolved noticeably in the last few years. The technology has enabled them to add substantial value to the supply chain by using information.In addition to group purchasing, today's healthcare GPOs act as informational powerhouse and empower the buyers with strategic information, technology, and consulting services to identify opportunities of cost savings and prevent possible revenue leakages.The early literature on GPOs has mainly focused on the different aspects of group purchasing, e.g. power of group buying, allocation of cost savings among members, group formation and member commitment, pricing of GPOs' intermediary services, and the issues regarding competition and anti-trust. However, not much research has been done analyzing the economic consequences of GPOs' new roles as information powerhouses and strategic consultants. In this paper, we present an overview of the existing literature, describe the emerging roles of GPOs beyond group purchasing, and then identify the overlooked research areas that invite further studies by the research community.

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Stable Group Purchasing Organizations

Cited by 30 publications

References 29 publications

Collaborative replenishment in the presence of intermediaries

Collaborative replenishment in the presence of intermediaries

Joint Selling of Complementary Components Under Brand and Retail Competition

A Research Agenda for Emerging Roles of Healthcare GPOs and Their Evolution from Group Purchasing to Information Sharing to Strategic Consulting

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