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Seminar
Department of Systems Engineering and Engineering Management
The Chinese
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Title |
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Decentralized Supply Risk Management: Asymmetric
Information, Diversification, Competition, and Procurement Service Providers |
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Speaker |
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Prof. Volodymyr Babich |
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Date |
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Aug. 20th, 2012 (Monday) |
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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
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(Engineering Building Complex Phase 2) |
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CUHK |
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Abstract:
In this talk, I will focus on a manufacturer’s strategic use of a dual-sourcing option, when facing suppliers, possessing private information about their disruption likelihood. Having derived the manufacturer’s optimal procurement contract, I will show that the optimal contract can be interpreted as the manufacturer choosing between diversification and competition benefits. Better information increases diversification benefits and decreases competition benefits. Therefore, with better information the manufacturer is more inclined to diversify. Interestingly, better information may increase or decrease the value of the dual-sourcing option, depending on the size of the manufacturer’s revenue (with large per unit revenue the attractiveness of diversification makes information and a dual-sourcing option complements). Surprisingly, under asymmetric information, the manufacturer may cease to diversify in reaction to eroding supply base reliability in order to leverage competition, while it would do just the opposite under symmetric information. Finally, we will look into the effect of codependence between supply disruptions. Lower codependence prompts the manufacturer to rely less on competition. Because competition keeps the information costs in check, a reduction in supplier codependence increases the manufacturer’s value of information. Therefore, strategic actions to reduce codependence between supplier disruptions should not be seen as a substitute for learning about suppliers’ reliabilities. In the talk I will also reflect on general challenges and opportunities in supply risk management arising from the decentralized nature of supply chains and highlight the benefits and the costs of using procurement service providers who have superior information about suppliers’ reliabilities. |
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Biography:
Volodymyr Babich
is an associate professor of Operations and Information Management at the
McDonough School of Business, |
************************* ALL ARE WELCOME ************************
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Host |
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Prof. Sean X. Zhou |
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(852) 3943-8336 |
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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 |
Website |
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