A Study on Capacity Investment Decision of Component Supplier in a Rapidly Growing Market  

Oleh:

Wu, SiDi ; Onari, Hisashi

Jenis: Article from Proceeding
Dalam koleksi: The 14th Asia Pacific Industrial Engineering and Management Systems Conference (APIEMS), 3-6 December 2013 Cebu, Philippines, page 1-9.
Topik: Production & Operations Management; Semiconductor Industry; Supply Chain Management
Fulltext: 1011.pdf (545.57KB)

Isi artikel

This study concerns the production capacity investment decision in a component market on its growth stage of high-tech industry. In this kind of market, the suppliers need to do investment frequently including new capacity installation and capacity enhancement. The suppliers may do underinvestment with considering of risk possibly caused by demand uncertainty. We investigate two stages of investment decision making of a component supplier. One scheme is a single decision-making with a spot contract between a component supplier and a set maker. The other one is a joint decision-making with a long-term sale and purchase contract according to which a supplier built his production capacity before demand is realized. We compare the two kinds of investment decision-making by analyzing the whole supply chain profits and the risk of the two players. It is proved that with a joint decision-making, it is possible to encourage the component supplier to expand production capacity, so as to maximize supply chain profits under those uncertain situations.

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