Procurement Strategies with Unreliable Suppliers Under Correlated Random Yields

2021 ◽  
Author(s):  
Lingxiu Dong ◽  
Xin Geng ◽  
Guang Xiao ◽  
Nan Yang
Keyword(s):  
Demand Uncertainty ◽  
Risk Mitigation ◽  
Critical Role ◽  
Main Tool ◽  
Sole Source ◽  
Problem Definition ◽  
Production Processes ◽  
Procurement Cost ◽  
Random Yields ◽  
Supply Risks

Problem definition: This paper studies the sourcing of a monopoly firm that procures from multiple unreliable suppliers to meet its deterministic/price-dependent demand. The suppliers’ production processes are unreliable and are modeled by correlated proportional random yields. Academic/practical relevance: As a proactive risk-mitigation tool, supply diversification has been widely studied in the literature, with the primary focus on independent supply risks. However, supply risks in practice may be correlated in nature for various reasons. By accounting for yield correlation among suppliers’ production processes, our work aims to help firms better manage their supply base and fully exploit the benefit of risk pooling through diversification. Methodology: Stochastic optimization serves as our main tool for analysis. Results: We formulate the firm’s problem in a general n-supplier setting and prove its structural properties. For a two-supplier case, we fully characterize the firm’s optimal sourcing decision and provide a unified measurement to quantify how yield correlation and characteristics jointly affect the supply base selection. Specifically, we show that when the two suppliers are highly positively correlated, the firm may sole-source from the supplier with higher effective procurement cost (the procurement cost per expected delivered unit) and also higher reliability. In addition, as the production yields become more positively correlated, supply diversification becomes less likely, and the firm’s profit decreases. Moreover, assuming multivariate normally distributed yields, we generalize those results and relevant insights to the multiple-supplier case. We uncover the critical role played by yield correlation and illustrate the insufficiency of using effective procurement cost alone to qualify a supplier. Finally, we incorporate demand uncertainty to confirm the robustness of our findings. Managerial implications: Our results urge caution in selecting the optimal supply base when the yield risks are correlated. Particularly, yield correlation, effective procurement costs, and supplier reliability should be jointly taken into account; otherwise, ignoring any one of these factors may lead to suboptimal outcomes.

Strategic Sourcing Under Severe Disruption Risk: Learning Failures and Under-Diversification Bias

2020 ◽  
Author(s):  
Kyle Goldschmidt ◽  
Mirko Kremer ◽  
Douglas J. Thomas ◽  
Christopher W. Craighead
Keyword(s):  
Risk Mitigation ◽  
Problem Definition ◽  
Diversification Strategy ◽  
Strategic Sourcing ◽  
Supply Disruptions ◽  
Ex Post ◽  
Sourcing Strategy ◽  
Daunting Task ◽  
Disruption Risk ◽  
Managerial Implications

Problem definition: We study sourcing behavior in severe conditions where supply disruptions are rare but carry the potential of wiping out several rounds worth of a firm’s profit. Academic/practical relevance: The tradeoff between scale economies from supplier consolidation and risk mitigation from supplier diversification is at the core of firms’ sourcing strategy and one that is empirically understudied. Methodology: We study supplier diversification through a behavioral lens and test theoretically derived predictions under controlled laboratory conditions. Results: Our data provide strong evidence for under-diversification. We posit that this pattern is partly because of the fact that investing in supplier diversification involves an upfront cost to achieve a delayed, and rarely encountered, benefit. Managerial implications: Under-diversification bias is costly, and its causes are difficult to overcome, presenting firms with the daunting task of devising debiasing mechanisms that reinforce a supplier diversification strategy when the rarity of disruptions almost always render supplier consolidation the ex post preferred strategy.

scholarly journals Phosphorus Scavenging in the Unicellular Marine Diazotroph Crocosphaera watsonii

2006 ◽  
Vol 72 (2) ◽  
pp. 1452-1458 ◽  
Author(s):  
Sonya T. Dyhrman ◽  
Sheean T. Haley
Keyword(s):  
Nitrogen Fixation ◽  
Critical Role ◽  
Sole Source ◽  
Phosphate Transport ◽  
Phosphate Binding ◽  
High Affinity ◽  
Tropical Environments ◽  
The Pacific ◽  
The Many ◽  
Crocosphaera Watsonii

ABSTRACT Through the fixation of atmospheric nitrogen and photosynthesis, marine diazotrophs play a critical role in the global cycling of nitrogen and carbon. Crocosphaera watsonii is a recently described unicellular diazotroph that may significantly contribute to marine nitrogen fixation in tropical environments. One of the many factors that can constrain the growth and nitrogen fixation rates of marine diazotrophs is phosphorus bioavailability. Using genomic and physiological approaches, we examined phosphorus scavenging mechanisms in strains of C. watsonii from both the Atlantic and the Pacific. Observations from the C. watsonii WH8501 genome suggest that this organism has the capacity for high-affinity phosphate transport (e.g., homologs of pstSCAB) in low-phosphate, oligotrophic systems. The pstS gene (high-affinity phosphate binding) is present in strains isolated from both the Atlantic and the Pacific, and its expression was regulated by the exogenous phosphate supply in strain WH8501. Genomic observation also indicated a broad capacity for phosphomonoester hydrolysis (e.g., a putative alkaline phosphatase). In contrast, no clear homologs of genes for phosphonate transport and hydrolysis could be identified. Consistent with these genomic observations, C. watsonii WH8501 is able to grow on phosphomonoesters as a sole source of added phosphorus but not on the phosphonates tested to date. Taken together these data suggest that C. watsonii has a robust capacity for scavenging phosphorus in oligotrophic systems, although this capacity differs from that of other marine cyanobacterial genera, such as Synechococcus, Prochlorococcus, and Trichodesmium.

Mobile Payment Services, Government Involvement, and Mobile Network Operator Performance

2022 ◽  
Author(s):  
Yan Dong ◽  
Sining Song ◽  
Fan Zou
Keyword(s):  
Critical Role ◽  
Market Performance ◽  
Mobile Network ◽  
Problem Definition ◽  
Financial Inclusion ◽  
Mobile Payment ◽  
Data Set ◽  
Government Involvement ◽  
Payment Services

Problem definition: Recent developments in mobile payment services (MPS) have shown an increasing role of mobile-government (m-government) initiatives in improving the market performance of mobile network operators (MNOs) and financial inclusion. High costs and operational challenges have discouraged MNOs from fully committing to the development of MPS, but government involvement under m-government may increase MNO user bases by providing the scale and scope necessary to incentivize MNOs. Academic/practical relevance: Extant research on mobile payment has ignored the role of governments as important stakeholders in the mobile financial ecosystem. Our research contributes to the literature by examining the role of governments as business partners in MPS launches and the effect of government involvement on MNO user bases. Methodology: Using a unique proprietary data set from the mobile network industry, we design a quasi-experiment to examine the causal effects of government involvement in MPS on MNOs’ total mobile connections. More importantly, we adopt a changes-in-changes (CIC) estimation approach to further establish nonlinear treatment effects of government involvement based on MNO size and MPS type. Results: We find that government involvement expands MNO user bases beyond MPS launches. Such effects increase with MNO size and MPS variety, favoring larger MNOs and, to a certain degree, MNOs with diverse offerings of government-involved MPS. Government involvement in MPS launches also directly benefits MNOs with microloan services. In addition, government regulations and policies to encourage financial inclusion can also expand MNO user bases. Managerial implications: Governments play a critical role in promoting technologies and financial services both as a regulator and as a business partner. To improve market performance, MNOs should take advantage of the scale and scope of government services by partnering with government agencies in launching MPS. MNOs should also embrace government policies and regulations to increase user bases.

Co-Production Processes with Random Yields in the Semiconductor Industry

1994 ◽  
Vol 42 (3) ◽  
pp. 476-491 ◽  
Author(s):  
Gabriel R. Bitran ◽  
Stephen M. Gilbert
Keyword(s):  
Semiconductor Industry ◽  
Production Processes ◽  
Random Yields

Managing uncertainty: Lessons from volcanic lava disruption of transportation infrastructure in Puna, Hawaii

2018 ◽  
Vol 16 (1) ◽  
pp. 29 ◽  
Author(s):  
Karl Kim, PhD ◽  
Pradip Pant, PhD ◽  
Eric Yamashita, MURP
Keyword(s):  
Travel Behavior ◽  
Planning Process ◽  
Critical Role ◽  
Volcanic Hazards ◽  
Problem Definition ◽  
Transportation Infrastructure ◽  
Background Information ◽  
Effective Response ◽  
Long Duration ◽  
Response And Recovery

A recent lava flow in Puna, Hawaii, threatened to close one of the major highways serving the region. This article provides background information on the volcanic hazards and describes events, responses, and challenges associated with managing a complex, long-duration disaster. In addition to the need to better understand geologic hazards and threats, there is a need for timely information and effective response and recovery of transportation infrastructure. This requires coordination and sharing of information between scientists, emergency managers, transportation planners, government agencies, and community organizations. Transportation assets play a critical role in terms of problem definition, response, and recovery. The challenges with managing a long-duration event include: (1) determining when a sufficient threat level exists to close roads; (2) identifying transportation alternatives; (3) assessing impacts on communities including the direct threats to homes, businesses, structures, and infrastructure; (4) engaging communities in planning and deliberation of choices and alternatives; and (5) managing uncertainties and different reactions to hazards, threats, and risks. The transportation planning process provides a pathway for addressing initial community concerns. Focusing not just on roadways but also on travel behavior before, during, and after disasters is a vital aspect of building resilience. The experience in Puna with the volcano crisis is relevant to other communities seeking to adapt and manage long-term threats such as climate change, sea level risk, and other long-duration events.

scholarly journals Reliability centered maintenance actions prioritization using fuzzy inference systems

2016 ◽  
Vol 22 (4) ◽  
pp. 433-452 ◽  
Author(s):  
Mahmoud Awad ◽  
Rami Afif As’ad
Keyword(s):  
Ad Hoc ◽  
Fuzzy Inference ◽  
Risk Mitigation ◽  
Critical Role ◽  
Real Life ◽  
Cost Ratio ◽  
Relative Importance ◽  
Inference System ◽  
Content Type ◽  
Reliability Centered Maintenance

Purpose Deploying an effective maintenance strategy across an organization stands out as an essential risk mitigation measure that plays a critical role toward improving the reliability and availability of production facilities. The purpose of this paper is to propose a simple, yet well-structured approach toward prioritizing maintenance actions as part of a reliability centered maintenance (RCM) implementation plan, and selecting the most important subset of those actions subject to time and budget constraints. Design/methodology/approach A comprehensive RCM actions prioritization methodology is proposed using four criteria: severity, benefit to cost ratio, customer satisfaction, and easiness of action implementation. The method utilizes fuzzy inference system (FIS) to incorporate subject matter experts’ feedback into the decision-making process. The output of the FIS, which takes the form of a numerical weight that assesses the relative importance of each criterion, is then fed into a binary integer program that selects the optimal maintenance actions out of a set of possible actions. Findings The implementation of the developed methodology is demonstrated using a real-life example of a hydraulic brake system circuit that is used in construction equipment. The computational results illustrate the validity of the proposed approach and indicate that the selection of which maintenance actions to carry out is impacted by the relative importance (i.e. weight) of the considered criteria. Originality/value The work presented in this paper provides the decision makers with a systematic procedure that helps in selecting the most relevant maintenance actions instead of making the selection in a complete ad hoc manner or based merely on subjective opinions.

Managing sustainable service improvements in manufacturing companies

Kybernetes ◽  
2007 ◽  
Vol 36 (5/6) ◽  
pp. 583-595 ◽  
Author(s):  
Heiko Gebauer ◽  
Elgar Fleisch
Keyword(s):  
Cognitive Processes ◽  
Critical Role ◽  
Main Tool ◽  
Service Improvement ◽  
Maturity Stage ◽  
Manufacturing Companies ◽  
Managerial Implication ◽  
Content Type ◽  
Product Manufacturing ◽  
Improvement Programs

PurposeThe paper aims to provide a better understanding of how cognitive processes limit service improvements in typical product manufacturing companies.Design/methodology/approachCase studies are the main tool for theory development. All investigated manufacturing companies have been seeking possibilities to enhance their profitability through services, because their products were mainly in the maturity stage with decreasing margins and profitability.FindingsThe objective was to show how companies can overcome the typical “cultural” habits and cognitive processes by offering some guidelines to managers seeking to establish sustainable service improvement programs.Research limitations/implicationsThe remarks are limited to product manufacturing firms.Practical implicationsThe key managerial implication is a method to overcome cognitive processes, which limit service improvements.Originality/valueThe paper establishes that cognitive processes form several feedback structures that all play a critical role in determining the success of service improvements.

Comparative Studies of Three Backup Contracts Under Supply Disruptions

2015 ◽  
Vol 32 (02) ◽  
pp. 1550006 ◽  
Author(s):  
Jing Hou ◽  
Xiangpei Hu
Keyword(s):  
Demand Uncertainty ◽  
Expected Profit ◽  
Supply Uncertainty ◽  
Positive Effects ◽  
Optimal Decisions ◽  
Capacity Reservation ◽  
Make To Order ◽  
Supply Risks ◽  
Buy Back ◽  
Cost Parameters

We focus our research on a supply chain involving one buyer and two independent suppliers of the same product. The main supplier is prone to supply disruption and recurrent supply uncertainty, and the backup supplier is perfectly reliable but supply goods at higher prices. Three kinds of backup contracts between the buyer and the backup supplier are investigated to mitigate supply risks: A capacity reservation contract, a make-to-order contract, and a buy-back contract. Models are developed to study how the buyer's expected profit and optimal decisions related to each contract change with the supply risks. We also examine the sensitivity of various cost parameters on the optimal decisions, and compare the values of three backup contracts for the buyer. Furthermore, we present how these results differ from those obtained in the analysis with demand uncertainty considered. Our study provides managerial insights into the positive effects of different backup contracts on the buyer's expected profit in the events of unexpected disruption.

scholarly journals TonB-Dependent Transporters in Sphingomonads: Unraveling Their Distribution and Function in Environmental Adaptation

2020 ◽  
Vol 8 (3) ◽  
pp. 359 ◽  
Author(s):  
Devyani Samantarrai ◽  
Annapoorni Lakshman Sagar ◽  
Ramurthy Gudla ◽  
Dayananda Siddavattam
Keyword(s):  
Outer Membrane ◽  
Critical Role ◽  
Sole Source ◽  
Gram Negative Bacteria ◽  
Toxic Substances ◽  
Protein Coding ◽  
Gram Negative ◽  
Genome Context ◽  
Dependent Transport ◽  
And Function

TonB-dependent transport system plays a critical role in the transport of nutrients across the energy-deprived outer membrane of Gram-negative bacteria. It contains a specialized outer membrane TonB-dependent transporter (TBDT) and energy generating (ExbB/ExbD) and transducing (TonB) inner membrane multi-protein complex, called TonB complex. Very few TonB complex protein-coding sequences exist in the genomes of Gram-negative bacteria. Interestingly, the TBDT coding alleles are phenomenally high, especially in the genomes of bacteria surviving in complex and stressful environments. Sphingomonads are known to survive in highly polluted environments using rare, recalcitrant, and toxic substances as their sole source of carbon. Naturally, they also contain a huge number of TBDTs in the outer membrane. Out of them, only a few align with the well-characterized TBDTs. The functions of the remaining TBDTs are not known. Predictions made based on genome context and expression pattern suggest their involvement in the transport of xenobiotic compounds across the outer membrane.

When Variability Trumps Volatility: Optimal Control and Value of Reverse Logistics in Supply Chains with Multiple Flows of Product

2020 ◽  
Author(s):  
Alexandar Angelus ◽  
Özalp Özer
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Reverse Logistics ◽  
Demand Uncertainty ◽  
Problem Definition ◽  
Feasible Region ◽  
Base Stock Policy ◽  
Multiple Flows ◽  
Stock Policy ◽  
Heuristic Policy

Problem definition: We study how to optimally control a multistage supply chain in which each location can initiate multiple flows of product, including the reverse flow of orders. We also quantify the resulting value generated by reverse logistics and identify the drivers of that value. Academic/practical relevance: Reverse logistics has been gaining recognition in practice and theory for helping companies better match supply with demand, and thus reduce costs in their supply chains. Nevertheless, there remains a lack of clarity in practice and the research literature regarding precisely what in reverse logistics is so important, exactly how reverse logistics creates value, and what the drivers of that value are. Methodology: We first formulate a multistage inventory model to jointly optimize ordering decisions pertaining to regular, reverse, and expedited flows of product in a logistics supply chain, where the physical transformation of the product is completed at the most upstream location. With multiple product flows, the feasible region for the problem acquires multidimensional boundaries that lead to the curse of dimensionality. Next, we extend our analysis to product-transforming supply chains, in which product transformation is allowed to occur at each location. In such a system, it becomes necessary to keep track of both the location and stage of completion of each unit of inventory; thus, the number of state and decision variables increases with the square of the number of locations. Results: To solve the reverse logistics problem in logistics supply chains, we develop a different solution method that allows us to reduce the dimensionality of the feasible region and identify the structure of the optimal policy. We refer to this policy as a nested echelon base stock policy, as decisions for different product flows are sequentially nested within each other. We show that this policy renders the model analytically and numerically tractable. Our results provide actionable policies for firms to jointly manage the three different product flows in their supply chains and allow us to arrive at insights regarding the main drivers of the value of reverse logistics. One of our key findings is that, when it comes to the value generated by reverse logistics, demand variability (i.e., demand uncertainty across periods) matters more than demand volatility (i.e., demand uncertainty within each period). To analyze product-transforming supply chains, we first identify a policy that provides a lower bound on the total cost. Then, we establish a special decomposition of the objective cost function that allows us to propose a novel heuristic policy. We find that the performance gap of our heuristic policy relative to the lower-bounding policy averages less than 5% across a range of parameters and supply chain lengths. Managerial implications: Researchers can build on our methodology to study more complex reverse logistics settings, as well as tackle other inventory problems with multidimensional boundaries of the feasible region. Our insights can help companies involved in reverse logistics to better manage their orders for products, and better understand the value created by this capability and when (not) to invest in reverse logistics.

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