Christopher S. Tang

Robust strategies for mitigating supply chain disruptions

When major disruptions occur, many supply chains tend to break down and take a long time to recover. However, not only can some supply chains continue to function smoothly, they also continue to satisfy their customers before and after a major disruption. Some key differentiators of these supply chains are cost-effective and time-efficient strategies. In this paper, certain “robust” strategies are presented that possess two properties. First, these strategies will enable a supply chain to manage the inherent fluctuations efficiently regardless of the occurrence of major disruptions. Second, these strategies will make a supply chain become more resilient in the face of major disruptions. While there are costs for implementing these strategies, they provide additional selling points for acquiring and retaining apprehensive customers before and after a major disruption.

The Power of Flexibility for Mitigating Supply Chain Risks

Lee [2004. The triple--a supply chain. Harvard Business Review 102-112] articulated that alignment, adaptability, and agility are the basic ingredients for managing supply chain risks. While it is clear that flexibility (agility) enhances supply chain resiliency, it remains unclear how much flexibility is needed to mitigate supply chain risks. Without a clear understanding of the benefit associated with different levels of flexibility, firms are reluctant to invest in flexibility especially when reliable data and accurate cost and benefit analysis are difficult to obtain. In this paper, we present a unified framework and 5 stylized models to illustrate that firms can obtain significant strategic value by implementing a risk reduction program that calls for a relatively low level of flexibility. Some of our model analyses are based on or motivated by models presented in recent literature. Our findings highlight the power of flexibility, and provide convincing arguments for deploying flexibility to mitigate supply chain risks.

Designing Supply Contracts: Contract Type and Information Asymmetry

This paper studies the value to a supplier of obtaining better information about a buyers cost structure, and of being able to offer more general contracts. We use the bilateral monopoly setting to analyze six scenarios: three increasingly general contracts (wholesale-pricing schemes, two-part linear schemes, and twopart nonlinear schemes), each under full and incomplete information about the buyers cost structure. We allow both sides to refuse to trade by explicitly including reservation profit levels for both; for the supplier, this is implemented through a cutoff policy. We derive the suppliers optimal contracts and profits for all six scenarios and examine the value of information and of more general contracts. Our key findings are as follows: First, the value of information is higher under two-part contracts; second, the value of offering two-part contracts is higher under full information; and third, the proportion of buyers the supplier will choose to exclude can be substantial.

Research advances in environmentally and socially sustainable operations

Consumers and governments are pressuring firms to strike a balance between profitability and sustainability. However, this balance can only be maintained in the long run if the firm can take a holistic approach to sustain the financial flow (profit), resource flow (planet) and development flow (people) for the entire ecosystem comprising poor producers in emerging/developing markets, global supply chain partners, consumers in developed countries, and the planet. By considering the flows associated with different entities within the ecosystem, we classify and summarize recent Operations Research/Management Science (OR/MS) research developments. Also, we identify several gaps for future research in this important area.

Batching and Scheduling Jobs on Batch and Discrete Processors

We consider a situation in which the manufacturing system is equipped with batch and discrete processors. Each batch processor can process a batch limited number of jobs simultaneously. Once the process begins, no job can be released from the batch processor until the entire batch is processed. In this paper, we analyze a class of two-machine batching and scheduling problems in which the batch processor plays an important role. Specifically, we consider two performance measures: the makespan and the sum of job completion times. We analyze the complexity of this class of problems, present polynomial procedures for some problems, propose a heuristic, and establish an upper bound on the worst case performance ratio of the heuristic for the NP-complete problem. In addition, we extend our analysis to the case of multiple families and to the case of three-machine batching.

On postponement strategies for product families with multiple points of differentiation

Several researchers have studied the benefits of product and process design that calls for delaying the differentiation of products. Previous research has focused on products having only one point of differentiation. However, in reality most product families have several points of differentiation. In this paper, we develop two models to study products with more than one point of differentiation. In each model, we examine the benefits of delayed differentiation at each of these points, and derive the necessary conditions when one type of delayed differentiation is more beneficial than the other. Our analysis indicates that demand variabilities, correlations and the relative magnitudes of the lead times play an important role in determining which point of differentiation should be delayed.

Liposome-Encapsulated Curcumin Suppresses Growth of Head and Neck Squamous Cell Carcinoma In vitro and in Xenografts through the Inhibition of Nuclear Factor κB by an AKT-Independent Pathway

Purpose: The purpose of this study was to determine whether a liposomal formulation of curcumin would suppress the growth of head and neck squamous cell carcinoma (HNSCC) cell lines CAL27 and UM-SCC1 in vitro and in vivo. Experimental Design: HNSCC cell lines were treated with liposomal curcumin at different doses and assayed for in vitro growth suppression using the 3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyltetrazolium bromide assay. A reporter gene assay was done on cell lines to study the effect of liposomal curcumin on nuclear factor κB (NFκB) activation. Western blot analysis was done to determine the effect of curcumin on the expression of NFκB, phospho-IκBα, phospho-AKT (pAKT), phospho-S6 kinase, cyclin D1, cyclooxygenase-2, matrix metalloproteinase-9, Bcl-2, Bcl-xL, Mcl-1L, and Mcl-1S. Xenograft mouse tumors were grown and treated with intravenous liposomal curcumin. After 5 weeks, tumors were harvested and weighed. Immunohistochemistry and Western blot analyses were used to study the effect of liposomal curcumin on the expression of NFκB and pAKT. Results: The addition of liposomal curcumin resulted in a dose-dependent growth suppression of both cell lines. Liposomal curcumin treatment suppressed the activation of NFκB without affecting the expression of pAKT or its downstream target phospho-S6 kinase. Expression of cyclin D1, cyclooxygenase-2, matrix metalloproteinase-9, Bcl-2, Bcl-xL, Mcl-1L, and Mcl-1S were reduced, indicating the effect of curcumin on the NFκB pathway. Nude mice xenograft tumors were suppressed after 3.5 weeks of treatment with i.v. liposomal curcumin, and there was no demonstrable toxicity of liposomal curcumin upon autopsy. Immunohistochemistry and Western blot analysis on xenograft tumors showed the inhibition of NFκB without affecting the expression of pAKT. Conclusions: Liposomal curcumin suppresses HNSCC growth in vitro and in vivo. The results suggest that liposomal curcumin is a viable nontoxic therapeutic agent for HNSCC that may work via an AKT-independent pathway.

Optimal Markdown Pricing: Implications of Inventory Display Formats in the Presence of Strategic Customers

We propose a game-theoretical model of a retailer who sells a limited inventory of a product over a finite selling season by using one of two inventory display formats: display all (DA) and display one (DO). Under DA, the retailer displays all available units so that each arriving customer has perfect information about the actual inventory level. Under DO, the retailer displays only one unit at a time so that each customer knows about product availability but not the actual inventory level. Recent research suggests that when faced with strategic consumers, the retailer could increase expected profits by making an upfront commitment to a price path. We focus on such pricing strategies in this paper, and study the potential benefit of DO compared to DA, and its effectiveness in mitigating the adverse impact of strategic consumer behavior. We find support for our hypothesis that the DO format could potentially create an increased sense of shortage risk, and hence it is better than the DA format. However, although potentially beneficial, a move from DA to DO is typically very far from eliminating the adverse impact of strategic consumer behavior. We observe that, generally, it is not important for a retailer to modify the level of inventory when moving from a DA to a DO format; a change in the display format, along with an appropriate price modification, is typically sufficient. Interestingly, across all scenarios in which a change in inventory is significantly beneficial, we observed that only one of the following two actions takes place: either the premium price is increased along with a reduction in inventory, or inventory is increased along with premium price reduction. We find that the marginal benefit of DO can vary dramatically as a function of the per-unit cost to the retailer. In particular, when the retailers per-unit cost is relatively high, but not too high to make sales unprofitable or to justify exclusive sales to high-valuation customers only, the benefits of DO appear to be at their highest level, and could reach up to 20% increase in profit. Finally, we demonstrate that by moving from DA to DO, while keeping the price path unchanged, the volatility of the retailers profit decreases.

Store Choice and Shopping Behavior: How Price Format Works

This article presents a perceived shopping utility framework for analyzing the impact of retail price format on store choice. This, in turn, determines three key performance metrics: number of shoppers; number of trips; and average spending per trip. When choosing a store, consumers evaluate both the fixed and variable utilities of shopping. The fixed utility does not vary from trip to trip whereas the variable utility depends on the size and composition of the shopping list. This article summarizes prior findings on store choice, analyzes how retailers can improve their performance, and interprets the practices of leading retailers. It presents a framework that can accommodate situations where retailers face multiple segments of buyers who have different sensitivities to fixed and variable utilities.

The impact of product substitution on retail merchandising

Abstract We analyze the impact of product substitution on two key aspects of retail merchandising: order quantities and expected profits. To perform this analysis, we extend the basic news-vendor model to include the possibility that a product with surplus inventory can be used as a substitute for out of stock products. This extension requires a definition and an approximation for the resulting effective demand under substitution. A service rate heuristic is developed to solve the extended problem. The performance of this heuristic is evaluated using an upper bound generated by solving the associated Lagrangian dual problem. Our analysis suggests that this heuristic provides a tractable and accurate method to determine order quantities and expected profits under substitution. We apply this heuristic to examine how the level of demand uncertainty and correlation, and the degree of substitution between products affect order quantities and expected profits under substitutable demand. In addition, we use the heuristic to better understand the mechanism by which substitution improves expected profits.