A Purchasing Framework for B2B Pricing Decisions and Risk‐sharing in Supply Chains*

Abstract

ABSTRACT This paper presents a common modelling structure for (i) the implementation of operational policies by individual purchasing managers of risk‐sharing agreements among supply‐chain partners, and (ii) the integration of brick and click purchasing policies in a B2B. The problem of price uncertainty created within these two environments is modelled as a stochastic repetitive‐sales problem, applicable to any probability distribution. The model identifies sufficient conditions for regenerative ordering cycles, which allows for the use of the renewal reward theorem. The end result is a two‐price purchasing policy, which may substantially ease implementation problems across a global corporation's purchasing managers world‐wide and across B2B markets.