Date of Award
Olin Business School
Doctor of Philosophy (PhD)
This dissertation is composed of three chapters, studying operational flexibilities, risking sharing contracts, and firms' sourcing strategies.
Chapter 1 investigates the interconnection among multiple-stage decisions of the oil refining process: crude procurement (mix of crude oils and quantity), intermediate processing (conversion from heavy to light fraction), and blending decisions. The emphasis is to understand how those decisions are affected by conditions of input and output market conditions and the refinery's processing capability, especially its two types of operational flexibility, namely, crude oil mixing in crude procurement and conversion of heavy (low-quality) fraction to light (high-quality) fraction in refining. We offer insights on the impact of market conditions on the values of conversion and mixing flexibility.
Chapter 2 studies two prevailing types of contracts used in the semiconductor industry for horizontal capacity coordination between an IDM (integrated device manufacturer) and a foundry: fixed commitment contracts and capacity reservation contracts. Due to different nature of incentives under these contracts, it is not clear which type of contract performs better from the IDM's perspective. We show the sourcing and capacity decisions the IDM should make under different circumstances of cost and contract structure and demand characteristics, and demonstrates complexity of sourcing decisions in horizontal capacity coordination. The relationships between the two types of contracts are also investigated.
Chapter 3 studies the tradeoff between sourcing cost and lead time in a competitive setting. Specifically, it studies a sourcing game where each firm may either source from a fast supplier with high cost or a slow supplier with low cost. With a fast supplier, the player can gather better demand information when making its quantity decision. We characterize the equilibrium of such a game and derive some managerial insights that may help explain the recent trend of backshoring in the U.S.
Chair and Committee
Karen L Wooley
Joshua A Maurer, Jacob Schaefer, Willam E Buhro
Wu, Xiaole, "Operational Flexibilities, Risk Sharing Contracts, and Sourcing Strategies" (2011). Arts & Sciences Electronic Theses and Dissertations. 523.
Available for download on Friday, May 15, 2111