A Study On Outsourcing Decision-making Strategy For OEM And CM

摘要

Recently the contract manufacturing industry has grown rapidly, as original equipment manufacturers (OEM) in a wide range of industries have increasingly preferred buying finished products from contract manufacturers (CM). And new technologies are being constantly introduced to CMs for upgrading the products. This paper focuses on the outsourcing strategy on technology introduction in a supply chain with one OEM and one CM. This study investigates the impact of inducing new technology to the CM for increasing the products' value. Through the development of analytical models that maximize the profits, the optimal outsourcing decisions for OEM and CM are explored under both competition and cooperation scenarios.