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Essays in Operations and Financial Contract in Supply Chain

Li, Hantao
http://rave.ohiolink.edu/etdc/view?acc_num=case1175002494

Abstract Details

2007, Doctor of Philosophy, Case Western Reserve University, Operations Research.
The first essay presents a new constrained optimization approach for solving systems of nonlinear equations. Particular advantages are realized when all of the equations are convex. For solving n-dimensional convex equations, the constrained optimization algorithm has the capability of determining that the system of equations has no solution. Global convergence of the algorithm is established under weaker conditions than previously known and, in this case, the algorithm reduces to Newton's method together with a constrained line search at each iteration. It is also shown how this approach has led to a new algorithm for solving the Linear Complementarity Problem. In second essay, we investigate the role of forward commitments and option contracts between a seller (supplier) and a buyer (retailer) in the presence of asymmetric information. In our case both parties face price and demand uncertainty but the retailer, being closer to the market, has additional information about the true demand. The supplier, aware of this asymmetry, and acting as a Stackelberg leader, designs contracting arrangements that best meet his interest. We contrast the role of forward and option contracts in this environment and identify cases where combinations of the two are dominant. We examine how profits are affected by the contracting arrangements and by the degree of asymmetric information. Finally, we investigate how alternative contracting arrangements alters the expected value of obtaining information that eliminates asymmetric information. In the similar setting to essay two, the retailer is able to extract an information rent above his reservation and, overall, the channel may deviate from its first best solution. Such a result seems to conform with the general notion that when two parties deal with each other, the less informed party cannot avoid paying an information rent to the informed party. However, we show in the last essay that using judicially designed contracts, a supplier can avoid paying any information rent to the privately informed retailer, and, at the same time, can extract all the first-best channel profit.
Peter Ritchken (Advisor)
retailer; Pro¿¿¿¿¿¿t; Supplier; CONTRACT

Recommended Citations

Citations

  • Li, H. (2007). Essays in Operations and Financial Contract in Supply Chain [Doctoral dissertation, Case Western Reserve University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=case1175002494

    APA Style (7th edition)

  • Li, Hantao. Essays in Operations and Financial Contract in Supply Chain. 2007. Case Western Reserve University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=case1175002494.

    MLA Style (8th edition)

  • Li, Hantao. "Essays in Operations and Financial Contract in Supply Chain." Doctoral dissertation, Case Western Reserve University, 2007. http://rave.ohiolink.edu/etdc/view?acc_num=case1175002494

    Chicago Manual of Style (17th edition)

case1175002494
811
© 2007, all rights reserved.
This open access ETD is published by Case Western Reserve University School of Graduate Studies and OhioLINK.