PhD Defense by Narendra Singh

Event Details
  • Date/Time:
    • Monday June 29, 2015
      2:00 pm - 3:30 pm
  • Location: Scheller College of Business: Room 221
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Summary Sentence: Product Strategies in Supply Chains

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PhD Defense by Narendra Singh

Scheller College of Business

 Monday, June 29th from 2:00pm to 3:30pm in Room 221.

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Area: Operations Management

 

Committee Members: Dr. Ravi Subramanian (co-chair), Dr. Karthik Ramachandran (co-chair), Dr. Stylianos Kavadias (University of Cambridge), Dr. L. Beril Toktay, and Dr. Morvarid Rahmani

 

Title: Product Strategies in Supply Chains

 

Dissertation Overview:

 

My doctoral dissertation titled “Product Strategies in Supply Chains,” consists of three essays. I study firms’ strategic decisions regarding design of products and product lines in different supply chain contexts. I focus on firms’ strategic interactions with supply chain members, including consumers and suppliers, in dynamic environments. The first essay of my dissertation studies the effect of supplier power and information structure on an OEM’s product design decisions. The other two essays of the dissertation focus on product returns and remanufacturing in the presence of strategic consumers and competition from third-party remanufacturers. In the following paragraphs, I summarize the research motivations and the main insights of the essays in my dissertation.

 

Essay 1: Product Quality and the Value of Information Asymmetry under Supplier-Specified Contracts

Original equipment manufacturers (OEMs) sometimes face the dilemma of whether to make an essential component of a product in-house or to source it from a supplier. Though sourcing from a supplier with a more favorable cost structure than the OEM could result in higher overall supply-chain profit, the supplier could potentially dictate contract terms and thus leave a lower share of the profit for the OEM. In this paper, we investigate implications of the relative cost efficiencies of the supplier and the OEM’s in-house option on the OEM’s choice of product design quality and subsequent contract outcomes. We model the problem as a dynamic game, wherein the OEM chooses product design quality in the first stage (determined by the design quality of a critical component), followed by the supplier offering a contract for supplying the critical component. The supplier has a more favorable cost structure than the OEM’s in-house option for manufacturing the critical component. Thereafter, the OEM either accepts the supplier’s offer or chooses her in-house option, and sells the product in the consumer market. Contrary to intuition, the supplier’s ability to offer a two-part tariff contract need not always benefit the supplier. In fact, a two-part tariff contract, compared to a price-only contract offered by the supplier, leaves both the OEM and the supplier worse off when the cost competitiveness of the OEM’s in-house option is sufficiently low. We also investigate the impact of information asymmetry regarding the cost structure of the OEM’s in-house option. Counterintuitively, information asymmetry may be desirable not only for the OEM, but also for the supplier.

 

Essay 2: The Value of Product Returns: Intertemporal Product Management with Strategic Consumers

Consumer product returns are a significant and growing concern in many industries, and firms typically deem returns to be undesirable. Firms may refurbish these returns to recover value, thereby allowing them to extend their product offering over time to new and refurbished products. We study the impact of returns on the intertemporal product strategy of a firm facing forward-looking or strategic consumers, who anticipate future availability and prices of products, and time their purchases to maximize net utility. Using a two-period model, we find that for sufficiently high return rates, the firm not only offers the refurbished product alone in the second period but also refurbishes all of the first-period returns. Importantly, we show that returns may act as a device for the firm to mitigate the well-known time inconsistency problem. Specifically, when the return rate is sufficiently high, the firm’s incentive to recover value from returns by refurbishing results in a reduction – and eventually elimination – of the incentive to offer the new product in the second period. Thus, a sufficiently high return rate allows the firm to implicitly commit that the new product will be offered exclusively in the first period, and therefore charge a premium for it. As a result, firm profit could increase with the return rate.

 

Essay 3: The Value of Competition in Remanufacturing

In line with the general perception among practitioners, the extant literature on remanufacturing shows that an OEM’s profit suffers when a third-party remanufacturer competes with the OEM’s remanufacturing operations. Accordingly, the literature recommends ways to deter third-party competition. However, competition for used products (or product cores) can influence the price of new products because forward-looking customers consider the resale value of new products when making their purchase decisions. In our model, an OEM offers a new product that depreciates over time. The OEM has an opportunity to acquire and remanufacture depreciated used products for sale in the subsequent period. A third-party remanufacturer also competes with the OEM for acquisition and remanufacturing of the used products. We investigate the impact of competition from the third-party remanufacturer on the OEM’s product strategy and profit in the presence of strategic consumers. Of specific interest is whether competition from the third-party remanufacturer is always undesirable for the OEM when they both face strategic consumers.

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Business, defense, graduate students, PhD
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  • Created By: Tatianna Richardson
  • Workflow Status: Published
  • Created On: Jun 15, 2015 - 5:44am
  • Last Updated: Oct 7, 2016 - 10:12pm