Reported by: Lucy Gongtao Chen, Associate Professor, NUS Business School

Time: April 18, 2023 (Tuesday) 10:30-12:00 AM

Tencent Conference Number: 857 581 784

Content Introduction:Strategic inventory refers to the inventory held by firms purely out of strategic considerations other than operational reasons (e.g., economies of scale). In this paper, we investigate the roles of strategic inventory in a system with two parallel supply chains under both full bargaining and partial bargaining, which differ in whether inventory is included in the bargaining terms. We find that under full bargaining, horizontal competition can induce an asymmetric equilibrium whereby only one of the chains carries strategic inventory and benefits from it when the holding cost is small. The whole system, however, is worse off. Under partial bargaining, regardless whether there is horizontal competition, the retailer in a supply chain always carries inventory when his bargaining power is small and the inventory holding cost is low.Furthermore, with horizontal competition, inventory hurts (improves) the system performance when the inventory holding cost is small (above a threshold and not too big). We also find that full bargaining can be inferior to partial bargaining when where is horizontal competition.

Personal Introduction:Lucy Gongtao Chen is an Associate Professor in the Department of Analytics and Operations at NUS Business School, National University of Singapore. She received her PhD and MSc degrees in Operations Management from the Johnson Graduate School of Management, Cornell University. She also holds a bachelor degree in Engineering from the School of Economics and Management, Tsinghua University. Her research interests mainly lie in the areas of inventory management, supply chain management, and the interface between operations and finance (marketing). Her work has been published in journals such as Management Science, Operations Research, Manufacturing & Service Operations Management, Production and Operations Management, and Journal of Operations Management. She won an honorable mention in the M&SOM Student Paper Competition.

(Organized by: Department of Management science and Logistics, Scientific Research and Academic Exchange Center)