1. "The Role of an Invisible Hand in Supply Chain Performance" with Scott Webster
The competitive equilibrium paradigm predicts optimal product pricing in a supply chain comprised of multiple buyers and multiple sellers. The result specifies the mathematical underpinnings for Adam Smith's seminal principle of an invisible hand – buyers and sellers freely pursuing their own interests in a market economy are led, as if by an invisible hand, to an outcome that is best overall. In other words, competitive equilibrium paradigm predicts that supply chain coordination should occur automatically, as if guided by and invisible hand. In contrast, the analysis of a supply chain comprised of one buyer and one seller predicts inflated pricing, a phenomenon that has come to be known as double marginalization. In this research, we will try to investigate these alternative theories for the purposes of identifying environmental characteristics that are conducive to (near) system optimal decisions by independent firms in a supply chain.
2. "Ordering and Pricing a Fashion Product to Minimize Ex-Post Regret"with Scott Webster, Charles Wang
We consider the problem of ordering and pricing a leading-edge fashion product. The retailer cannot re-order during the brief period of time when the product is targeted to a segment of high-paying consumers. Product that remains after the "selling season" will be marked down for broader market appeal. Product leftover from the "clearance season" will be sold through a liquidator at known salvage value. At the beginning of the "selling season", the retailer does not know the probability distributions of consumer valuation for the product, but is able to accurately estimate their lower and upper limits. After the "selling season", the retailer observes sales and uses this information to determine the clearance price for the product. The objective is to minimize the maximum loss in profit with information update, or minimax ex-post regret. We derive closed-form expressions for optimal quantity and/or prices for a series of single-product minimax ex-post regret problems.
3. "Ordering Seasonal Product in Association with Pricing Responding Coupon to Maximize the Profit"
During Full Moon Festival, many moon cake manufacturers in China sell moon cake gift cards at a discount to the companies or other organizations which give the gift cards to their employees or customers free who could use the gift card to redeem the moon cake. Very often, those gift card holders will cash the gift card by selling them to a scalper at deeper discount. The scalper will either sell the gift card, at the prices lower than the gift card face value, to some consumers who would like to buy moon cake at a cheaper price, or will return the gift card to redeem the moon cake or will return the unsold gift cards to the manufacturers at a price higher than his purchasing price but lower than the manufacturer initial selling price. We would like to understand how moon cake gift card impact the supply chain performance.