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Seminar
Department of Systems Engineering and Engineering Management
The Chinese
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Title |
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Advance Selling in a
Supply Chain under Uncertain Supply and Demand |
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Speaker |
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Prof. Christopher S. Tang |
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University Distinguished Professor, and Edward W. Carter
Chair in Business Administration |
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UCLA |
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Date |
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Oct. 26th, 2011 (Wednesday) |
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Time |
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4:30 p.m. - 5:30 p.m. |
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Venue |
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Room 513 |
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William M.W. Mong Engineering
Building |
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(Engineering Building Complex Phase 2) |
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CUHK |
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Abstract:
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We examine three selling strategies of a manufacturer who produces and sells a seasonal product to a retailer under uncertain supply and demand: (A) advance selling: pre-sells the product before observing uncertain supply and demand; (B) regular selling: sells the product after supply and demand are realized; and (AB) dynamic selling: combines both strategies A and B. We model strategies A and B as single-period Stackelberg games, and model strategy AB as a two-period dynamic Stackelberg game as follows. In each period, the manufacturer sets his wholesale price and the retailer determines her order quantity; however, in the second period, both firms take into account the decisions chosen in the first period as well as the information about supply and demand revealed after the first period. Our results suggest the following: by switching from strategy B to strategy A, the manufacturer and the retailer can end up in a lose-lose situation. However, if the manufacturer switches from strategy B to strategy AB, then both firms will always end up in a win-win situation. Therefore, advance selling alone can be harmful to both firms unless it is combined with regular selling as in strategy AB. We highlight the different impact of supply or demand uncertainty under these strategies: more demand uncertainty tends to benefit both firms, whereas more supply uncertainty tends to hurt both firms. Our results are robust even when there are multiple competing retailers or when the retailer has the option to hold back her procured units in order to obtain a higher retail price. * Joint work with Soo-Haeng Cho,
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Biography:
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Christopher Tang, a member of the faculty since
1985, served as Senior Associate Dean at the His research work deals with complex issues arising from
production planning, supply chain management and the marketing/manufacturing
interface. He has co-edited 4
books, co-written 1 book, and published over 90 articles in journals such as Management
Science, Operations Research, Manufacturing and Service
Operations Management, Journal of Marketing Research, Production and Operations Management,
and Sloan Management Review. Moreover, he has served on editorial
boards for over 15 journals, including Management Science, Operations
Research, Manufacturing, Service and Operations Management, and
Production and Operations Management. In addition to his academic teaching experience at Hong
Kong University of Science and Technology, National University of Singapore, Chris received his BSc (First Class Honors)
from King’s College, |
************************* ALL ARE WELCOME ************************
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Host |
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Prof. Zhou Xiang, Sean |
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Tel |
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(852) 2609-8336 |
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Email |
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Enquiries |
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Prof. Nan Chen or Prof. Sean X. Zhou |
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Department of Systems Engineering and Engineering
Management |
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CUHK |
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Website |
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