Speaker：Tang Qinshen, Assistant Professor, Nanyang Business School, Nanyang Technological University.

Date: 12:00-13:00, 30th June 2021

Tencent Meeting ID:147595465 PW:554327

Abstract: 

We study a supply chain in which a supplier sets the wholesale price and a retailer responds with an order quantity. Both the two firms can be either risk-neutral—maximizing the expected profit—or target-oriented, which is to maximize her/his ability to reach a target profit. We provide a strong support for firms’ target-based preference and the linear target formation model through a survey as well as analyzing company data. With the firms’ target-oriented behavior evaluated by a CVaR-satisficing measure, we apply a game theoretical framework to investigate how the target-based preference affects supply chain performance. We find that, a firm, be it a supplier or a retailer, is always hurt by its target-based preference, but can benefit from its trading partner’s target-based preference. A risk-neutral supplier, for example, can sometimes reap the whole supply chain’s profit if the retailer is target-oriented; and a target-oriented supplier always performs better with a target-oriented retailer than a risk-neutral one. Furthermore, a target-oriented retailer or/and supplier can help alleviate the double marginalization effect, and sometimes help the supply chain achieve the same efficiency level as in a risk-neutral centralized system, with just a wholesale price contract. Another important finding is that if both firms are target-oriented, then the supply chain can have a higher expected profit under a decentralized system than a centralized one. This contrasts to the case when both firms are risk-neutral. We also investigate the role of outside option and information asymmetry and find that both can alleviate the retailer’s disadvantage of being target-oriented.

Speaker’s Bio：

Dr. Tang Qinshen is an assistant professor at the Nanyang Business School, Nanyang Technological University. Before joining NBS, he was a research fellow at the Institute of Operations Research and Analytics, National University of Singapore. He received his Ph.D. in Analytics and Operations from the National University of Singapore, and his M.S. in Management Science and Engineering, B.S. in Industrial Engineering from South China University of Technology. His primary research interests lie in data-driven and target-based decision making under uncertainty, with applications in operations and supply chain management. He is also interested in applying cooperative and non-cooperative game theory in solving problems in the interface of operations management and marketing/economics. He has an Honorable Mention in both POMS-HK Student Paper Competition and POMS Supply Chain Management Student Paper Competition.