| Contents |
| This paper explores the dynamic evolution of supply chain relationships and their effects on product flows and prices. We investigate the interplay of the heterogeneous decision makers in the supply chain network (manufacturers, retailers, and demand markets) and compute the resultant equilibrium pattern of product outputs, transactions, product prices, and levels of relationship between decision makers. Manufacturers and retailers are multicriteria decision-makers who decide about their production and transaction quantities as well as the level of relationship they want to pursue in order to maximize net return and minimize risk over the multiperiod planning horizon. We focus on the following questions: (1) what are the effects of relationship on supply chain network transaction cost, risk and profitability? (2) What are the impacts of the time of relationship-specific investments on supply chain network? (3) what are the effects of relationships on supply chain network efficiency? The results show that high levels of relationship can lead to lower overall supply chain cost and risk and therefore lower price and higher product transaction. |
|