Analysis of the market-based adjustable outsourcing contract under uncertainties

Baichun Feng, Tao Yao, Bin Jiang

Research output: Contribution to journalArticlepeer-review

20 Scopus citations


The market-based adjustable contract for customized goods or services has emerged in outsourcing practices. Its objective is to minimize the operational risks inherent in today's volatile environment of operations. Our research reveals several important properties of this contract through a continuous-time analytical approach. Specifically, we consider the determination of this contract between two risk-averse firms through a Nash bargaining process. We derive the optimal adjusting mechanism analytically and extensively analyze the application boundary of the market-based adjustable outsourcing contract. We conclude by discussing implications for practice and research.

Original languageEnglish (US)
Pages (from-to)178-188
Number of pages11
JournalProduction and Operations Management
Issue number1
StatePublished - Jan 2013

All Science Journal Classification (ASJC) codes

  • Management of Technology and Innovation
  • Industrial and Manufacturing Engineering
  • Management Science and Operations Research


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