Behzad Hezarkhani
and
Wieslaw Kubiak

ABSTRACT

The tremendous amount of research on supply chain management, concentrating either on analytical models under very specific problem settings or on qualitative studies of relevant managerial issues, often leaves one with the question of how to make a holistic sense of these all. Approaching supply chains as nexus-of-contracts, we argue that to manage a supply chain is to design the appropriate mechanisms that coordinate the optimization efforts of rational decision makers given their incentive structures. By the very nature of supply chain management, we concentrate on the tactical and operational levels. We address how inter-related processes in the chain are managed by different decision makers and how the performance of supply chain can be tied to the incentives of rational decision makers. We draw upon several theories such as optimization, allocation of decision rights, performance measurement, incentive and mechanism design, and game theory. The relationship among these several theories is of principle interest to us. We provide insights from state-of-the-art research on this field and highlight some possible directions for future research.