Abstract
Specifying quality requirement is integral to any sourcing relationship, but vague and ambiguous specifications can often be observed in practice, especially when a buyer is in the initial stage of sourcing a new product. In this research, we study a supplier's production incentives under vague or exact quality specifications. We prove that a vague specification may in fact motivate the supplier to increase its quantity provision, resulting in a higher delivery quality. Vague quality specification can therefore be advantageous for a buyer to screen potential suppliers with an initial test order, and then rely on the received quality level to set more concrete quality guidelines. There is a degree, though, to which vague quality specification can be effective, as too much vagueness may decrease the supplier's quantity provision and hence the expected delivery quality.
Original language | English (US) |
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Pages (from-to) | 222-236 |
Number of pages | 15 |
Journal | Naval Research Logistics |
Volume | 60 |
Issue number | 3 |
DOIs | |
State | Published - Apr 2013 |
Keywords
- quality control
- specification vagueness
- supply quality risk
ASJC Scopus subject areas
- Modeling and Simulation
- Ocean Engineering
- Management Science and Operations Research