Springer Series in Supply Chain Management Anna Nagurney Dong Li Competing on Supply Chain Quality A Network Economics Perspective Springer Series in Supply Chain Management Volume 2 SeriesEditor ChristopherS.Tang UniversityofCalifornia LosAngeles,CA,USA Moreinformationaboutthisseriesathttp://www.springer.com/series/13081 Anna Nagurney • Dong Li Competing on Supply Chain Quality A Network Economics Perspective 123 AnnaNagurney DongLi IsenbergSchoolofManagement DepartmentofManagementandMarketing UniversityofMassachusetts CollegeofBusiness Amherst,Massachusetts,USA ArkansasStateUniversity StateUniversity,Arkansas,USA ISSN2365-6395 ISSN2365-6409 (electronic) SpringerSeriesinSupplyChainManagement ISBN978-3-319-25449-4 ISBN978-3-319-25451-7 (eBook) DOI10.1007/978-3-319-25451-7 LibraryofCongressControlNumber:2015956775 SpringerChamHeidelbergNewYorkDordrechtLondon ©SpringerInternationalPublishingSwitzerland2016 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpartof thematerialisconcerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation, broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmissionorinformation storageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilarmethodology nowknownorhereafterdeveloped. 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Preface Qualityisessentialtothefoodthatweeat,thewaterthatwedrink,theairthatwe breathe, and every product that we consume and utilize daily, from medicines to theclothesthatwewear,thehomesthatweliveinandtheplaceswherewework, thetechnologicaldevicesthatwedependon,andthevehiclesthattransportus.The qualityofaproduct,orlackthereof,canmakeorbreakacompany’sreputationand affectitsultimatesuccessorfailure. Intoday’snetworkeconomy,supplychainsweavetogethersuppliers,manufac- turers,freightserviceproviders,andotherstakeholdersintointricatenetworksthat produce,distribute,andtransporttheproductstoretailersandconsumersacrossthe globe.These networksare essential to the ultimate quality of the products.Under globalization and decentralization, the analysis of interactions among decision- makers, with a focus on quality issues, merits a new and fresh investigation and synthesis. Inthisbook,weexplorefundamentalissuesconcerningqualityinsupplychain networkstheoretically,computationally,and throughnumerouscase studies based onsolvednumericalexamples.Thebookdevelopsthefundamentalmethodologies formodelformulation,analysis,andsolutionofsupplychaincompetitionproblems in quality. The supply chain network topologies of the models reveal graphically the interactions among decision-makers, whose behavior can be studied and cap- tured mathematically. In addition, this book deals with quality and information asymmetry, the imposition of minimum quality standards, R&D, outsourcing decision-making, make-or-buy decisions, supplier selection, and freight service providerselection.Bothequilibriummodelsandmanyoftheirdynamiccounterparts arepresented. The audience for this book includes researchers, practitioners, and students interested in a rigorous treatment of supply chains and quality issues from an integratedoperationsresearchandnetworkeconomicsperspective. vii viii Preface WethankSpringerforpermissiontousepartsofourpreviouslypublishedarticles thathaveappearedinitsjournals.WealsothankWileyandElsevierforpermission toexpandjournalarticlesintobooksizeasallowedbytheircopyrightagreements. Full citations and acknowledgmentto our published articles are provided later in thisbook. We view this book as a beginning for the channeling of additional interest, research,andresourcesto enhancequalityofproductsandthe performanceofthe associatedsupplychainsforabetterworld.Wefeelthatthejourneyhasjustbegun, andwewelcomecommentsandnewcollaborators. Amherst,USA AnnaNagurney September2015 DongLi Acknowledgments This book is the culmination of half a decade of intense research on quality and supply chain networks that we conducted, individually, together, and with additionalcollaborators.Itwouldnothavebeenpossiblewithouttheassistanceand encouragementofmanyorganizationsandindividuals. We thank the National Science Foundation for support during this period underNSFgrantCISE#1111276,NeTS:Large:CollaborativeResearch:Network Innovation Through Choice project awarded to the University of Massachusetts AmherstwiththefirstauthorasaCo-PI. We acknowledge the Isenberg School of Management Dean Mark A. Fuller for his leadership and supportof the doctoralprogramduring the second author’s doctoral studies. We also thank colleagues in the Department of Operations and InformationManagementattheIsenbergSchoolattheUniversityofMassachusetts Amherstfortheircollegiality. The first author warmly acknowledgesthe School of Business, Economicsand Law at the University of Gothenburg in Sweden for the support and hospitality extended to her during multiple stays there as a Visiting Professor of Operations Management.In addition,she acknowledgesthe John F. Smith MemorialFund at theUniversityofMassachusettsAmherstwhichsupportsherchairedprofessorship. Special thanks to our collaborators on problems related to supply chains, networks, and quality: Professor Tilman Wolf of the College of Engineering at the University of Massachusetts Amherst, Professor Ladimer S. Nagurney of the University of Hartford, Professor Jonas Floden of the University of Gothenburg, Professor Min Yu of the University of Portland, and Professor Amir H. Masoumi of Manhattan College. The first author also thanks her doctoral students: Shivani ShuklaandSaraSaberi,forstimulatingdiscussions. We thank Professor Christopher S. Tang of the University of California, Los Angeles,theEditoroftheseriesinwhichthisbookappears,forhisprofessionalism andresponsivenessthroughoutthisbookproject.WealsoacknowledgeNeilLevine, the Springer Editor for Operations Research & Management Science; Christine Crigler, the Assistant Editor; as well as Sumathy Thanigaivelu, our Production EditoratSpringer. ix