Bargaining service-level agreements. A behavioral investigation

  • Castaneda Acevedo, Jaime Andres (PI)
  • Villa, Sebastián (CoI)
  • Urrea, Gloria (CoI)
  • Cossio Castano, Sara Vanessa (Student)

Project: Research Project

Project Details


Service level agreements are performance-based contracts that attempt to coordinate decisions in a supplier-buyer channel to optimize channel performance.

Our objective is to understand how the negotiation of service level objectives and the costs associated with failing to meet these objectives or the premiums for achieving them within a service level agreement influence the performance of a supplier-buyer channel.

On the one hand, analytical approaches to service level agreements focus on complex inventory systems.

If taken to a laboratory experiment, such complexity could introduce confounding factors into the analysis.

On the other hand, behavioral approaches to SLAs focus on a limited set of SLA structures and do not allow for negotiation.

Therefore, the knowledge derived from these studies is limited.

We will derive the full set of SLA structures in a single-period inventory system and test them in a laboratory experiment in which human buyers and suppliers will negotiate the parameters of SLAs.

The results will provide behavioral insight into how to design SLAs that improve supplier-buyer channel performance and provide operations managers with a solid foundation for negotiating SLAs.

This will also lay the foundation for future research exploring the negotiation of service level agreements in more complex inventory systems.


Behavioral operations, service-level agreements, bargaining, supply chain contracts, analytical modeling, laboratory experiments.

Commitments / Obligations

1. Conference presentation 1: initial results of the project.

2. Conference presentation 2: additional results of the project.

3. Working paper 1: analytical paper describing the normative properties of a single-period fill rate target SLA.

4. Working paper 2: experimental paper describing the effects of bargaining over the SLA parameters on the SBC efficiency

Engage one Young Investigator: this is contingent on the availability of financial resources (e.g., Small Grants financing).

2. Engage one Graduate Assistant: the Supply Chain Management research line is currently working with one Graduate Assistant.
We expect to engage this person in some of the project's activities since this could be beneficial for her training (e.g., design of the lab experiment, data analysis).

We expect to present the project's results in institutional research seminars, both internal and external. In addition, some academic journals offer the possibility of making accepted papers more accessible by giving their authors the opportunity of writing short articles without any technical jargon or analysis.

To the extent that such option is available, we intend to use it to communicate the results to a non-academic audience.
Effective start/end date6/15/216/15/23

UN Sustainable Development Goals

In 2015, UN member states agreed to 17 global Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all. This project contributes towards the following SDG(s):

  • SDG 3 - Good Health and Well-being

Main Funding Source

  • National


  • Bogotá D.C.


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