Abstract:
We consider two applications dynamic stochastic supply chains. The first application is a decentralized two-period supply chain in which a manufacturer produces a product with benefits of cost learning, and sells it through a retailer facing a price-dependent demand. The manufacturer’s second-period production cost declines linearly in the first-period production, but with a random learning rate. The manufacturer may or may not have the inventory carryover option. We formulate the problem as a two-period Stackelberg games and obtain their feedback equilibrium solutions explicitly. We then examine the impact of mean learning rate and learning rate variability on the pricing strategies of the channel members, on the manufacturer’s production decisions, and on the retailer’s procurement decisions. We show that as the mean learning rate or the learning rate variability increases, the traditional double marginalization problem becomes more severe, leading to greater efficiency loss in the channel. We obtain revenue sharing contracts that can coordinate the dynamic supply chain. The second application studies a novel manufacturer-retailer cooperative advertising game where, in addition to the traditional setup into which the manufacturer subsidizes the retailer's advertising effort, we also allow the reverse support from the retailer to the manufacturer. This is modeled as a mixed leadership game in which one player is a leader on some decisions and a follower on other decisions. We find an equilibrium that can be expressed by a solution of a set of algebraic equations. We then conduct an extensive numerical study to assess the impact of model parameters on the equilibrium.

About the Speaker:
Prof. Suresh P. Sethi is Eugene McDermott Chair Professor of Operations Management and Director of the Center for Intelligent Supply Networks (C4ISN) at The University of Texas at Dallas. He has written 11 books and published over 400 research papers in manufacturing and operations management, finance and economics, marketing, and optimization theory. He initiated and developed doctoral programs in operations management at The University of Texas at Dallas UTD and the University of Toronto. He built the operations management area of UTD’s Naveen Jindal School of Management into its current research powerhouse. Two conferences were organized in his honor: in Aix-en-Provence in 2005 and at The University of Texas at Dallas in 2006, with Harry M. Markowitz, a 1990 Nobel Laureate in Economics, as the keynote speaker. In 2025, there are/will be three conferences in his honor at The Magna Carta Island in London, The University of Texas at Dallas, and National Economics University in Hanoi. Two books have been edited in his honor. Production and Operations Management Society (POMS) awards the Suresh Sethi Best Interdisciplinary Paper Award every two years, beginning in 2025. Prestigious honors and awards received by him include Fellow of the Canadian Academy of Science, IEEE Fellow, INFORMS Fellow, SIAM Fellow, POMS Fellow, AAAS Fellow, IITB Distinguished Alum, Carnegie Mellon University’s Tepper School of Business-Alumni Achievement Award (2015), and POMS President (2012).