1 Department of Economics and Business Economics, Aarhus BSS, Aarhus University2 Fisher College of Business, Ohio State University3 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
The centralization versus decentralization choice is perhaps the quintessential organizational structure decision. In the operations realm, this choice is particularly critical when it comes to the procurement function. Why firms may opt to decentralize procurement has been often studied and confirmed to be a multifaceted choice. This paper complements existing studies by detailing the trade-offs in the centralization versus decentralization decision in light of firm's decision to cede procurement choices to its individual devisions can help moderate inventory levels and provide a natural salve on supply chain frictions.