【Time】14:00～15:00, July 16, 2015 (Thursday)  

【Venue】Room 510, Shunde Building  

【Title】  Mitigating Supply Uncertainty: The Interplay Between Diversification and Pricing, 

【Speaker】Dr. Tao Li 

【Host】Dr. Yang Zhang  

【Abstract】We consider a firm’s sourcing problem from one reliable supplier and one unreliable supplier in two price setting scenarios. In the committed pricing scenario, the firm makes the pricing decision before the supply uncertainty is resolved. In the responsive pricing scenario, the firm‘s pricing decision is made after the supply uncertainty is resolved. For the committed pricing scenario, we develop a rather general condition on supply uncertainty that guarantees the unimodality of the firm’s objective function. By comparing the firm‘s optimal diversification decisions in the two pricing scenarios, we examine the interplay of supply diversification strategy and responsive pricing strategy in mitigating supply uncertainty. While both strategies are effective in mitigating supply uncertainty, we show that they are not necessarily substitutes. The relationship between these two strategies depends on two adverse effects caused by supply uncertainty: the lost-revenue effect and the lost-goodwill effect. More specifically, when the lost-revenue effect dominates the lost-goodwill effect, these two strategies are complements; otherwise, they are substitutes. Finally, we examine the impact of market size, price sensitivity, supplier reliability, and failure rebate on the interplay between these two strategies, and discuss the implications of our results. 

【Bio】Tao Li joined the Operations Management and Information Systems faculty at Santa Clara University in Fall 2012, where he teaches operations management for the Business School‘s undergraduate core curriculum.Among his research interests are supply chain management with a special emphasis on sourcing strategy, and the operations-marketing interface. His scholarship has appeared in top journals such as Production and Operations Management.He has taught at the State University of New York at Buffalo, and the University of Texas at Dallas, and served with companies such as Procter & Gamble and Motorola in China. In addition, he has worked at FujiTsu Electronics, Woodward Controls, and in the Key Laboratory for Advanced Ceramics and Machining Technology of the Ministry of Education of China.Professor Li received a B.S. in material science and engineering, and a B.S. in financial management, as well as his M.S. in management science and engineering from Tianjin University (China). In addition, he received the MBA and M.S. in supply chain management from the University of Texas at Dallas, where he earned his Ph.D. in 2012.

All interested are welcome!