Coordinating Production and Delivery Under a (z, Z)-Type Vendor-Managed Inventory Contract
Manufacturing & Service Operations Management
Marketing Science
Designing a Call Center with Impatient Customers
Manufacturing & Service Operations Management
Competition and Outsourcing with Scale Economies
Management Science
Producer-Supplier Contracts with Incomplete Information
Management Science
Contingent Labor Contracting Under Demand and Supply Uncertainty
Management Science
A Supplier's Optimal Quantity Discount Policy Under Asymmetric Information
Management Science
Information, Contracting, and Quality Costs
Management Science
Gatekeepers and Referrals in Services
Management Science
Multisourcing: moving beyond outsourcing to achieve growth and agility
Multisourcing: moving beyond outsourcing to achieve growth and agility
Procuring Fast Delivery: Sole Sourcing with Information Asymmetry
Management Science
Service-Level Agreements in Call Centers: Perils and Prescriptions
Management Science
Modeling and Analysis of Call Center Arrival Data: A Bayesian Approach
Management Science
Call Center Outsourcing Contract Analysis and Choice
Management Science
Call Center Outsourcing: Coordinating Staffing Level and Service Quality
Management Science
Call Center Outsourcing Contracts Under Information Asymmetry
Management Science
Promised Lead-Time Contracts Under Asymmetric Information
Operations Research
Exploiting Market Size in Service Systems
Manufacturing & Service Operations Management
Hi-index | 0.00 |
We consider outsourcing in two important service settings: call center and order fulfillment operations. An important factor in both is the inherent economies of scale. Therefore, we advance a unifying model covering both applications and study the associated contracting problem under information asymmetry. At the time of contracting, the outsourcing firm, “the originator,” faces uncertainty regarding the demand volume but has private information about its probability distribution. The true demand is quickly observed once the service commences. The service provider invests in capacity before the start of the operation and offers a menu of contracts to screen different types of the originator. Adopting a mechanism design approach, we prove that a menu of two-part tariffs achieves the full-information solution. Hence, it is optimal among all possible contracts (in both settings) because of economies of scale and contractibility of realized demand.