Abstract: Assembly system has been widely used in automobile, electronics, and many other industries. However, the accompanying challenge is how to ensure every supplier in system can be moved harmonized and synchronized. An on-time delivery model with two suppliers and one manufacturer has been built. Considering under a delay payment contract, the optimal time decisions for both suppliers and manufacturer have been studied when each supplier has an unique stochastic supply leadtime. Two game-theoretics have been analysed not only between the manufacturer and supplier, but also between two suppliers. The results shows that under a delay payment contract, suppliers and manufacturer can minimize their cost by choosing the best time decision. Also, supply chain’s service level will keep the same no matter in a centralized system or a decentralized system.

Key words: Assembly system, Decentralized system, Delay payment contract, On-time delivery, Synchronous supply