Prof. Jeannette Song
Professor, Duke University
Talk:
Long Term Partnership for Achieving Efficient Capacity Allocation
Abstract:
We consider a manufacturer and a group of independent buyers who partner to share a scarce but expensive-to-build capacity over a finite horizon under privately informed demand conditions. At the beginning of the time horizon, the manufacturer must invest in building his capacity, and all members may invest in increasing their own and possibly other members' market sizes. Then each member observe and update their private, history-dependent demand information over time. Because the value of the capacity to each member is highly uncertain when investment and capacity reservations are made, achieving supply chain efficiency while sustaining under a dynamic environment is challenging for the partnership. We address this issue by proposing a multi-period membership-type agreement (hereafter referred to as the Agreement as a series of single-period contracts with flexible terms that are renegotiated each period. The Agreement enforces ex-post efficient capacity allocation and ex-ante investment. The set of inter-partner transfers in the Agreement makes each member the residual claimant of the supply chain surplus and hence induces truthful demand reports. This contract is also budgetbalanced (i.e., no additional money is left or required at the end of each period) and voluntary (allowing any member to quit at any time with pre-reserved capacity and the possibility of rejoining later). Finally, the Agreement induces efficient capacity investment and the cost of investment can be shared by all members through a capacity reservation fee.
*Joint work with Nataliya Kuribko, Tracy Lewis, and Fang Liu
Biography:
Professor of Operations Management; BA (Beijing Normal University), MSc (Chinese Academy of Sciences), PhD (Columbia University)
Professor Song's expertise is in operations and supply chain management. She studies topics like supply chain coordination mechanisms, global sourcing strategies, supplier quality and risk management, socially responsible and sustainable supply chain development, supply chain finance, inventory and logistics system design and planning, e-commerce channel design, assemble-to-order systems, product variety and order fulfillment. She has published numerous articles in leading international academic journals such as Management Science, Manufacturing & Service Operations Management (M&SOM), and Operations Research. She also co-edited the book, Supply Chain Structures: Coordination, Information and Optimization.
