Coordination and competition in resource-constrained channels

This thesis deals with five important ideas pertaining to supply chains and supply contracts: coordination, flexibility in allocating profit, the push-pull boundary, the valuation of capacity, and cooperation versus competition and its effects on profit and prices. Throughout the thesis, we focus on capacity-constrained supply channels, motivated by the fact that most real-world supply chains have physical or monetary constraints.In the first part of this thesis, we show that when a supply channel is capacity-constrained and the constraint is tight, there is a set of linear wholesale price contracts that coordinates the channel while allowing the supplier to make a profit. We prove this for the one-supplier/one-newsvendor supply channel as well as the many-supplier/one-newsvendor channel configuration (with each supplier selling a unique product). We analyze how this set of wholesale prices changes as we change the channel's capacity constraint. We also explore conditions under which these channel-efficient linear wholesale price contracts result from the equilibrium behavior of a newsvendor procurement game. Our newsvendor procurement game generalizes the Stackelberg game introduced in Lariviere and Porteus (2001) to allow for multiple suppliers as well as a capacity constraint at the newsvendor. In order to convey the worst-case channel performance when these channel-efficient contracts are not used in equilibrium, we quantify the worst-case efficiency loss for the supply channel using a distribution-free method. We also identify the set of Pareto-dominated contracts in a negotiation setting. Furthermore, unlike the unconstrained setting, we show that in the constrained setting wholesale price contracts can be flexible in allocating the channel profit without necessarily sacrificing coordination.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Electrical Engineering and Computer Science.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Sabbaghi, Navid, 1977-

Advisor dc:contributor.advisor

• Yossi Sheffi and John N. Tsitsiklis.

• Electrical Engineering and Computer Science.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/45875

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/45875