Group for Research in Decision Analysis

A Synopsis of Supply Chain Management Research at McGill

Tamer Boyaci Full Professor, Desautels Faculty of Management, McGill University, Canada

Saibal Ray Associate Professor, Desautels Faculty of Management, McGill University, Canada

This talk will feature a summary of some of the research we have been conducting in the area of Supply Chain Management (SCM) at McGill’s Desautels Faculty of Management. We will be focusing only on our own joint and independent research projects and agendas. Most of this research can be broadly considered as being at the interface of operations and marketing. On the operations side, we focus typically on capacity or inventory decisions, while on the marketing side we concentrate on how firms decide on the price to charge to their customers. We have been developing analytical models of centralized (single decision-maker) and decentralized (multiple, independent decision makers) supply chains in order to study the interaction between the two types of decisions as well as on developing integrated frameworks to simultaneously optimize these decisions, taking demand uncertainty and all relevant costs and benefits into account. In this seminar, we will first present models and results pertaining to two joint research areas: i) Capacity management and pricing for make-to-order MTO supply chains, and ii) Inventory management and pricing for make-to-stock (MTS) supply chains. For a MTO firm, capacity determines how fast and how reliably products can be delivered to customers, which are –in addition to price- the two most important demand enhancing customer-service elements n time-sensitive environments. Our research in the first area investigates the impact of capacity costs on optimal delivery time length, delivery reliability and price decisions, and on the optimal product differentiation strategy with respect to these three dimensions. The second area of research deals with integrated management of inventory/ordering and pricing decisions for MTS firms. We study optimal policy results for dynamic joint pricing and inventory control in a centralized setting. We extend these results to a decentralized supply chain (operating under a price-only contract), and show how dynamic pricing, inventory/ordering, and contracting flexibilities affect profits of the entire supply chain, as well as that of the individual channel members. At the end of the seminar, we will also provide brief overviews of our independent research at the interface of operations and marketing. This will include advance selling and dynamic pricing for capacity planning, and role of different contracting schemes (especially buyback) in decentralized, price-setting supply chain environments.