Production, Manufacturing and Logistics Consumers risk and quality control in a collaborative supply chain Charles S. Tapiero Polytechnic University of New York and ESSEC, B.P. 105, 95021 Cergy Pontoise, France Received 13 June 2005; accepted 21 July 2006 Available online 13 November 2006 Abstract The purpose of this paper is to provide a strategic collaborative approach to risk and quality control in a cooperative supply chain by using a Neyman–Pearson quantile risk framework for the statistical control of risks. The paper is focused on the statistical quality control of a supplier and a producer, applying the traditional Neyman–Pearson theory to the con- trol of quality in a supply chain environment. In our framework, the risks assumed by the parties in the supply chain depend on the organizational structure, the motivations and the power relationships that exist between members of the supply chain. Ó 2006 Elsevier B.V. All rights reserved. Keywords: Quality control; Supply chains; Risk 1. Introduction Risks have traditionally been used as a panacea for the many ills, real-potential-or imaginary that corporate firms deal with or sustain, either internally or externally (Agrawal and Seshadri, 2000). However, the growth and realignment along supply chains of corporate entities in an era of global and strategically focused and mar- ket sensitive organizations is altering the conception of corporate risk and how to manage and control these risks (Corbett and Tang, 1999; Cachon, 2002). Many of these risks are ill understood and as a result they are also poorly measured, augmenting the risks that corporate entities face. Supply Chain Managers have thus an important role to assume by focusing attention on supply chain specific risks. In other words, what these risks imply, how to measure and value them and how to ‘‘internalize them’’ in the costs and benefits calculations firms use to reach decisions. These problems have been increasingly recognized by numerous authors (for exam- ple, Cachon, 2002 as well as Reyniers and Tapiero, 1995a,b). Examples of such problems include the control of inventory problems and suppliers and producers contractual negotiations. These approaches use essentially a game theoretical framework, (see Friedman, 1986; Fudenberg and Tirole, 1991; Moulin, 1995), von Stackleberg (1934) and principal agents theory. Subsequent and related research includes Baiman et al., 2000; Lim, 2001; 0377-2217/$ - see front matter Ó 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.ejor.2006.07.039 E-mail address: ctapiero@poly.edu European Journal of Operational Research 182 (2007) 683–694 www.elsevier.com/locate/ejor