Supply Management in Multiproduct Firms with Fixed Proportions Technology

This paper studies the supply management of a primary input, where this input gives rise to multiple products in fixed proportions. My objective is twofold. First, I study fixed proportions technology under demand uncertainty in comparison with the flexible and dedicated technologies. I show that fixed proportions technology has a cost-pooling value over dedicated technology, which is larger than the capacity-pooling value of flexible technology over dedicated technology. I identify the critical role that demand correlation plays with the fixed proportions technology: in contrast to the capacity-pooling value, which decreases in demand correlation, the cost-pooling value increases in demand correlation. Second, focusing on the fixed proportions technology, I study supply management in the presence of contract and spot markets. I investigate how the optimal supply management strategy should respond to changing market uncertainties, and the differences in this response based on the contract type. I find that when the exercise price of the contract is high, a higher contract market dependence is the best response to the increasing demand correlation or spot price variability. However, a lower contract market dependence is the best response to the same when the exercise price is low. Managerially, these results are important because they imply that the supply management strategy adopted as a response to a change in the business environment should differ depending on the contract type. My results have implications about the new product strategy and the procurement contract choice of the processors in the agricultural industries. This paper was accepted by Yossi Aviv, operations management. </jats:p

Technical Appendix to "Stochastic Capacity Investment and Flexible vs. Dedicated Technology Choice in Imperfect Capital Markets"

Article DOI: https://doi.org/10.1287/mnsc.1110.1395</p

Parameter Selection in Genetic Algorithms

In this study, we provide a new taxonomy of parameters of genetic algorithms (GA), structural and numerical parameters, and analyze the effect of numerical parameters on the performance of GA based simulation optimization applications with experimental design techniques. Appropriate levels of each parameter are proposed for a particular problem domain. Controversial to existing literature on GA, our computational results reveal that in the case of a dominant set of decision variable the crossover operator does not have a significant impact on the performance measures, whereas high mutation rates are more suitable for GA applications

Stochastic Capacity Investment and Flexible vs. Dedicated Technology Choice in Imperfect Capital Markets

Permission granted by INFORMS to have published version on the SMU repository InK, 2014 March 3.</p

Operational Hedging: A Review with Discussion

Abstract Motivated by the increasing prevalence of operational hedging in corporate-level risk management programs, this paper provides an extensive overview and synthesis of the existing literature on operational hedging. In particular, we focus on the treatment of operational hedging in the operations management literature. We then explore how the concept of operational hedging is studied in the fields of finance, strategy and international business. Finally, we discuss and critique the approaches adopted in the operations management literature in the context of the broader literature on the topic

The Impact of Budget Constraints on Flexible vs. Dedicated Technology Choice

Ministry of Education, Singapore under its Academic Research Funding Tier