Thebuyer-supplierrelationshipplaysagreatroleinmosteconomicsystems.Thebuyingfirmusuallytriestofindanewsupplierwhoprovidesproductswithsatisfyingqualityandlowerprice.Abroadbranchofliteraturedealswiththedevelopmentofbuyer-supplierrelationships,butlimitedresearchisonthecircumstancesunderwhichabuyershouldterminatesucharelationshipandswitchtoanewsupplier.Inthispaper,theincentivecompatibilityconstraint(IC)whichinducestheentrantsuppliertoreporthistruecostisconsidered,andtheparticipationconstraint(PC)whichensurestheentrantsuppliertogetatleastreservationprofitistakenintoaccount.Thenthesupplierswitchingmodelissetuptominimizethebuyingfirm’stotalprocurementcostwhichincludesthetransferpaymenttotheincumbentsupplier,thepaymenttotheentrantsupplierandtheswitchingcost,andthebuyingfirm’sswitchingcostisconsideredasafunctionoftheswitchingquantity.WiththetheoreticalanalysisofIC,PCandtheproposedmodel,theoptimalsupplierswitchingstrategycanbeobtained.Finally,anumericalexampleisgiventoillustratetheeffectivenessoftheproposedmodelandtheswitchingstrategy.
