Prof. Edward Anderson
The University of Sydney
Talk:
Competing for contracts with buyer uncertainty: Choosing price and quality variables
Abstract:
We model a situation in which a single firm evaluates competing suppliers and selects just one. Suppliers have a convex cost function for the quality offered and submit bids involving both price and quality variables. The buyer makes a choice that, from the supplier's perspective, appears to contain a stochastic element -- for example the buyer may have information, which is not shared with the suppliers, and that gives one supplier an advantage in the final choice. We use a discrete choice model for the buyer behavior (e.g. multinomial logit). Our main result is that the supplier's decision on the quality variables is not affected by the competitive environment. Thus we can say that the suppliers compete only on price. We compare this with a second model in which the buyer's weighting on different quality variables is uncertain at the time bids are made.
This is joint work with a student of mine, Cheng Qian
Biography:
Edward Anderson is a professor of supply chain and operations management for The University of Texas at Austin’s McCombs School of Business. Within the school’s Department of Information, Risk, and Operations Management, he has taught courses on supply chain and operations management, project management, health care, and new venture design and implementation for the BBA, MBA, Ph.D., and Executive Education programs. Anderson has also served as director of the McCombs Healthcare Innovation Center, a research center that specializes in innovation in health care delivery. Anderson has published more than 40 articles of research on topics such as the economics of platform design, B2B platforms for supply chains, Industry 4.0, government policy and operations management, outsourced product development, service management, and health care discrimination. The work has appeared in top journals, including Information Systems Research, Management Science, Organization Science, Surgery, and Production and Operations Management. Anderson has also published numerous book chapters on optimal control theory, system dynamics, product strategy, and real options for MIT Press, Oxford, AMACOM Press, and Kluwer Press, and he has also written his own books, one of which serves as a primer on operations management for BBA and MBA students. For his expertise on supply chain innovation, outsourcing, and industrial policy, Anderson has been featured in Fox News, the Associated Press, Yahoo, Fortune, and NBC News, and he has testified as an expert witness on supply chain disruption before the Texas Senate. Before entering a career in teaching, Anderson worked as a product design engineer in the automotive industry and currently holds six patents. He earned a Bachelor of Applied Science in electrical engineering and history from Stanford University and a Ph.D. in management science from the Massachusetts Institute of Technology.
