Prof. Annabelle Feng
Purdue University
Talk:
Managing Dependent Random Supply Capacities in Dynamic Inventory-Pricing Problems
Abstract:
Supply uncertainty has been a major consideration in formulating firms’ sourcing strategy. Most work in this area assumes independent supply streams from different sources, though in reality the dependence among different sources are commonly observed. This is mainly due to the difficulty in analyzing models with dependent supplies. We consider a firm who replenishes from a set of suppliers whose capacities are positively dependent. Extending the notion of stochastic linearity via transforming the problem into one defined on a function space, we show that the objective of the dynamic inventory-pricing problem can written as a concave optimization problem. This observation allows us to establish the optimality of an almost threshold replenishment policy. Specifically, there is a reorder point for each supplier such that no order is issued to him when the inventory level is above this point and a positive order is placed almost everywhere when the inventory level is below this point. More importantly, the common wisdoms derived from models assuming independent suppliers may not hold any more. In particular, the firm may choose to order more from a less reliable supplier than from a more reliable one even if the former does not possess any cost advantage.(This is a joint work with J. George Shathikumar and Zheng Jia) Biography:Qi Annabelle Feng is a Professor in Operations Management, Krannert School of Management at Purdue University. She is the John and Donna Krenicki Chair in Operations Management, Area Head and Area Ph.D. Advsior at Krannert School of Management. Before joining Purdue, she was an Assistant Professor of McCombs School of Business at the University of Texas at Austin, Austin. She received the B.Eng. in Computer and Application and in Industrial Management Engineering from Shanghai Jiao Tong University, and Ph. D. degrees in Operations Management from the University of Texas at Dallas, USA. Her research interests include procurement and inventory management; design and manufacturing outsourcing; supply contract negotiations; workforce requirement forecast and optimization; role of population in economic growth. Prof. Feng is the department editor for Production and Operations Management. She has published several papers in top journal in the field of operations management, including Management Science, Manufacturing & Service Operations Management, Production and Operations Management, and Operations Research.
