Overview and classification of coordination contracts within forward and reverse supply chains

Among coordination mechanisms, contracts are valuable tools used in both theory and practice to coordinate various supply chains. The focus of this paper is to present an overview of contracts and a classification of coordination contracts and contracting literature in the form of classification schemes. The two criteria used for contract classification, as resulted from contracting literature, are transfer payment contractual incentives and inventory risk sharing. The overview classification of the existing literature has as criteria the level of detail used in designing the coordination models with applicability on the forward and reverse supply chains.Coordination contracts; forward supply chain; reverse supply chain

Essays in inventory decisions under uncertainty

Uncertainty is a norm in business decisions. In this research, we focus on the inventory decisions for companies with uncertain customer demands. We first investigate forward buying strategies for single stage inventory decisions. The situation is common in commodity industry where prices often fluctuate significantly from one purchasing opportunity to the next and demands are random. We propose a combined heuristic to determine the optimal number of future periods a firm should purchase at each ordering opportunity in order to maximize total expected profit when there is uncertainty in future demand and future buying price. Second, we study the complexities of bundling of products in an Assemble-To-Order (ATO) environment. We outline a salvage manipulator mechanism that coordinates the decentralized supply chain. Third, we extend our salvage manipulator mechanism to a two stage supply chain with a long cumulative lead time. With significant lead times, the assumption that the suppliers all see the same demand distribution as the retailer cannot be used.Ph.D.Committee Chair: Yih-Long Chang; Committee Member: Paul Griffin; Committee Member: Ravi Subramanian; Committee Member: Soumen Ghosh; Committee Member: Srinagesh Gavirnen

Against Inefficacy Objections: The Real Economic Impact of Individual Consumer Choices on Animal Agriculture

When consumers choose to abstain from purchasing meat, they face some uncertainty about whether their decisions will have an impact on the number of animals raised and killed. Consequentialists have argued that this uncertainty should not dissuade consumers from a vegetarian diet because the “expected” impact, or average impact, will be predictable. Recently, however, critics have argued that the expected marginal impact of a consumer change is likely to be much smaller or more radically unpredictable than previously thought. This objection to the consequentialist case for vegetarianism is known as the “causal inefficacy” (or “causal impotence”) objection. In this paper, we argue that the inefficacy objection fails. First, we summarize the contours of the objection and the standard “expected impact” response to it. Second, we examine and rebut two contemporary attempts (by Mark Budolfson and Ted Warfield) to defeat the expected impact reply through alleged demonstrations of the inefficacy of abstaining from meat consumption. Third, we argue that there are good reasons to believe that single individual consumers—not just individual consumers taken as an aggregate—really do make a positive difference when they choose to abstain from meat consumption. Our case rests on three economic observations: (i) animal producers operate in a highly competitive environment, (ii) complex supply chains efficiently communicate some information about product demand, and (iii) consumers of plant-based meat alternatives have positive consumption spillover effects on other consumers

Dynamic joint investments in supply chains under information asymmetry

Supply chain management involves the selection, coordination and motivation of independently operated suppliers. However the central planner's perspective in operations management translates poorly to vertically separated chains, where suppliers may have rational myopic reasons to object to full in- formation sharing and centralized decision rights. Particular problems occur when a downstream coordinator demands relation-specific investments (equipment, cost improvements in processes, adaptation of components to downstream processes, allocation of future capacity etc) from upstream suppliers without being able to commit to long-term contracts. In practice and theory, this leads of- ten to a phenomenon of either underinvestment in the chain or costly vertical integration to solve the commitment problem. A two-stage supply chain under stochastic demand and information asymmetry is modelled. A repeated investment-production game with coordinator commitment in supplier's investment addresses the information sharing and asset- specific investment problem. We provide a mitigation of the hold-up problem on the investment cost observed by the supplier and an instrument for truthful revelation of private information by using an investment sharing device. We show that there is an interior solution for the investment sharing parameter and discuss some extensions to the work.supply chain management, investment, information

Coordination of Supply Chain with One Supplier and Two Competing Risk-Averse Retailers under an Option Contract

This paper studies an option contract for coordinating a supply chain comprising one risk-neutral supplier and two risk-averse retailers engaged in promotion competition in the selling season. For a given option contract, in decentralized case, each risk-averse retailer decides the optimal order quantity and the promotion policy by maximizing the conditional value-at-risk of profit. Based on the retailers’ decision, the supplier derives the optimal production policy by maximizing expected profit. In centralized case, the optimal decision of the supply chain system is obtained. Based on the decentralized and centralized decision, we find the coordination conditions of the supply chain system, which can optimize the supply chain system profit and make the profits of the supply chain members achieve Pareto optimum. As for the subchain, we also find the coordination conditions, which generalize the results of the supply chain with one supplier and one retailer. Our analysis and numerical experiments show that there exists a unique Nash equilibrium between two retailers, and the optimal order quantity of each retailer increases (decreases) with its own (competitor’s) promotion level

Pricing Policies for a Dual-Channel Retailer with Cross-Channel Returns

Many retailers are adopting a dual-channel retailing strategy (DCRS) in which products are offered through two channels: physical stores and online stores. Due to regulations or competitive measures, such a strategy allows customers who find a purchase unsatisfactory to obtain a full refund through a same-channel return or a cross-channel return. No papers have collectively studied the aforementioned types of customer returns in a dual-channel context. This paper studies optimal pricing policies for a centralized and decentralized dual-channel retailer (DCR) with same- and cross-channel returns. How dual-channel pricing behavior is impacted by customer preference and rates of customer returns is discussed. It is found, through sensitivity analysis, that when a channel with significant customer preference faces a high rate of returns, decentralized channels generate a greater system profit for retailers than coordinated channels that have a unified pricing strategy. A DCR with a Stackelberg scheme has the proclivity to be more profitable when under the leadership of a channel with a high rate of returns and significant customer preference

Optimization of a Dual-Channel Retailing System with Customer Returns

A plethora of retailers have begun to embrace a dual-channel retailing strategy wherein items are provided to consumers through both an online store and a physical store. As a result of standards and competitive measures, many retailers provide buyers who are unhappy with their purchases with the ability to achieve a full refund. In a dualchannel retailing system, full reimbursements can be done through what is called a crosschannel return, when a buyer purchases a product from an online store and returns it to a physical store. They can also be done through what is called a same-channel return, when a buyer purchases a product from a physical store and returns it back to the physical store, or purchases a product from an online store and returns it back to the online store. No existing research has examined all common types of customer returns in the context of a dual-channel retailing system. Be notified that the practice of cross-returning an item purchased from the physical store back to the online store is not common. Thus, it is not considered in this dissertation. We first study the optimal pricing policies for a centralized and decentralized dual-channel retailer (DCR) with same- and cross-channel returns. We consider two factors: the dual-channel retailer’s performance under centralization with unified and differential pricing schemes, and the dual-channel retailer’s performance under decentralization with the Stackelberg and Nash games. How dual-channel pricing behaviour is impacted by customer preference and rates of customer returns is discussed. In this study, a channel’s sales requests is a linear function of a channel’s own pricing strategy and a cross-channel’s pricing strategy. The second problem is an extension of the first problem. The optimal pricing policies and online channel’s responsiveness level for a centralized and decentralized dual-channel retailer with same- and cross-channel returns are studied. Indeed, the online store is normally the distribution centre of the enterprise and is not limited to the customers in its neighbourhood. Also, the online store experiences a much higher return rate compared to the physical store. Thus, it has the capability and the need to optimize its responsiveness to customer returns along with its pricing strategy. A channel’s sales requests, in the second problem, is a linear function of a channel’s own price, a crosschannel’s price, and the online store’s responsiveness level. The third problem studies the dilemma of whether or not to allow unsatisfactory online purchases to be cross-returned to the physical store. If not properly considered, those returns may create havoc to the system and a retailer might overestimate or underestimate a channel’s order quantity. Therefore, we study and compare between four vi different strategies, and propose models to determine optimal order quantities for each strategy when a dual-channel retailer offers both same and cross-channel returns. Several decision making insights on choosing between the different cross-channel return strategies and some properties of the optimal solutions are presented. From the retailer’s perspective of outsourcing the e-channel’s management to a third party logistics and service provider, we finally study three different inventory strategies, namely transaction-based fee, flat-based fee, and gain sharing. For each strategy, we find both channels’ optimal inventory policies and expected profits. The performances of the different strategies are compared and the managerial insights are given using analytical and numerical analysis. Methodologies, insights, comparative analysis, and computational results are delivered in this dissertation for the above aforementioned problems