Faculty of Business Administration

Seminar Series
AIM

A Distributionally Robust Approach to Supply Chain Planning

Prof Grace Qi FU
Associate Professor in Decision Sciences
University of Macau

Date: October 30, 2019 (Wednesday)

Time: 11:00~12:00

Venue: Faculty of Business Administration, E22-4010

Abstract

How should decentralized supply chains set the profit sharing terms using minimal information on demand and selling price? We develop a distributionally robust Stackelberg game model to address this question. Our framework uses only the first and second moments of the price and demand attributes, and thus can be implemented using only a parsimonious set of parameters. More specifically, we derive the relationships among the optimal wholesale price set by the supplier, the order decision of the retailer, and the corresponding profit shares of each supply chain partner, based on the information available. Interestingly, in the distributionally robust setting, the correlation between demand and selling price has no bearing on the order decision of the retailer. This allows us to simplify the solution structure of the profit sharing agreement problem dramatically. Moreover, the result can be used to recover the optimal selling price when the mean demand is a linear function of the selling price.

Biography

Prof. Grace Qi Fu is an Associate Professor in Decision Sciences at the Faculty of Business Administration, University of Macau. Prior to joining the University of Macau, she was a Visiting Assistant Professor at the Hong Kong University of Science and Technology, where she obtained her Ph.D. Her research interests include operations management, supply chain management, and robust optimization. Her papers have been published in journals such as Operations Research, Production and Operations Management, European Journal of Operational Research.