ISyE Seminar - Vedat Verter

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TITLE: Price Flexible Transportation Procurement Contracts for Food Aid Delivery in Developing Countries


It is common practice among the international organizations to resort the local transport companies for delivering food aid in regions plagued by hunger and malnutrition. The reliability of the transportation services provided by these third parties is essential for ensuring the food security, much needed in these regions. The transporters in developing countries often inflate their tariffs in order to protect themselves from the expected price increases. They also allocate their trucks to secure jobs in the spot market when the contract rates are significantly lower than that of the spot market, which jeopardizes service quality. Using data gathered from the Kenya-based operations of the United Nation’s World Food Programme, we demonstrate that the randomness in transport spot market prices can be attributed to the fuel prices. Therefore, we devise a new barrier-type options contract that can be adopted for reducing the transporter’s downside risk and mitigating their incentive to bid defensively. Our findings through the numerical experiments on the real-life data set are encouraging since they demonstrate a noteworthy potential that both the food aid organization and the transporters can benefit from the implementation of the proposed contract scheme.

Short Bio:  Vedat Verter is James McGill Professor of Operations Management at the Desautels Faculty of Management of McGill University. He specializes on the application of business analytics for policy design and decision-making in the public sector. His areas of research are transport risk management, sustainable operations and healthcare operations management. His work in these areas is well recognized through top tier journal publications as well as invited presentations around the globe. In the area of healthcare, he focuses on preventive, primary, emergency, acute and chronic care processes, as well as their interaction. He is Founding Director of the NSERC CREATE Program in Healthcare Operations and Information Management, a seven-University PhD/PDF training program across Canada. Professor Verter is also Editor-in-Chief of Socio-Economic Planning Sciences, an international journal focusing on public sector decision-making. 


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  • Created By:
    Anita Race
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  • Modified By:
    Fletcher Moore
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