Dynamic Pricing and Inventory Management with Dual Unreliable Suppliers of Different Leadtimes


    Department of Systems Engineering and Engineering Management

            The Chinese University of Hong Kong


Title     : Dynamic Pricing and Inventory Management with Dual Unreliable Suppliers of Different Leadtimes

Speaker    : Dr. Xiting GONG

             Industrial and Operations Engineering Department

             University of Michigan, Ann Arbor

Date       : 1 February 2013 (Friday)

Time       : 11:00 a.m. – 12:30 p.m.***Special Time***

Venue      : Room 513

             William M.W. Mong Engineering Building




Supply disruption has been a big challenge faced by many firms. In practices, inventory control, dual sourcing, and pricing are three common strategies to mitigate supply disruption risk. In this talk, we consider a joint pricing and inventory control problem for a firm that has a quick-response supplier and a regular supplier, both suffering random disruptions. The quick-response (resp., regular) supplier can deliver any order in the same (resp., following) period the order is placed if there is no disruption; but nothing can be delivered otherwise. The random disruption processes of the two suppliers are modeled as independent Markov chains. We characterize the firm’s optimal inventory and pricing policies over a planning horizon, and identify the impacts of dual sourcing and supply reliability on the firm, on its customers, and on its suppliers. We show that both the firm and its customers benefit from dual sourcing and higher supply reliability. For suppliers, we find that if price is exogenously given, then one supplier will always receive more orders when the other one was disrupted and it is always worse off when the firm switches to the dual sourcing strategy; but neither result is true if price is an endogenous decision. We also find that a supplier does not necessarily benefit from higher supply reliability. This is a joint work with Xiuli Chao and Shaohui Zheng.


Xiting Gong is currently a research fellow in the Industrial and Operations Engineering Department at the University of Michigan, Ann Arbor. He received all his degrees from Peking University, with a Bachelor’s degree in Applied Mathematics, and Master’s and PhD degrees in Management Science. His research interests include operations and supply chain management, logistics and inventory control, and game theoretic applications. His recent research mainly focuses on stochastic inventory control involving emissions trading, remanufacturing, supply risk management, supply chain financing, etc.

************************* ALL ARE WELCOME ************************

Host:           Prof. Helen Meng

Tel:             (852) 3943-8316
Enquiries:     Mrs. Monica Wong

                    Department of Systems Engineering

                    and Engineering Management


Tel.:             (852) 3943-8315


Friday, February 1, 2013 - 03:00 to 04:30