Mechanism design for capacity planning under dynamic evolutions of asymmetric demand forecasts

Management Science

Volumn 59, Issue 4, 2013, Pages 987-1007

  Oh, Sechan ^a   Özer, Özalp ^b  

^a IBM ALMADEN RESEARCH CENTER   (United States)

^b UNIVERSITY OF TEXAS AT DALLAS   (United States)

Author keywords

Capacity planning; Information sharing; Martingale Model of Forecast Evolution; Mechanism design; Mechanism dependent reservation profit; Optimal stopping; Real options

Indexed keywords

CAPACITY PLANNING; INFORMATION SHARING; MARTINGALE MODEL OF FORECAST EVOLUTIONS; MECHANISM DESIGN; OPTIMAL STOPPING; REAL OPTIONS;

DECISION THEORY; DYNAMICS; INDUSTRY; INFORMATION ANALYSIS; INVESTMENTS; MACHINE DESIGN; MANUFACTURE; PROFITABILITY;

FORECASTING;

EID: 84875924996     PISSN: 00251909     EISSN: 15265501     Source Type: Journal    
DOI: 10.1287/mnsc.1120.1581     Document Type: Article

References (46)

1. Aitchison J, Brown JAC (1957) The Lognormal Distribution (Cambridge University Press, Cambridge, UK).
2. Akan M, Ata B, Dana J (2009) Revenue management by sequential screening. Working paper, Northwestern University, Evanston, IL.
3. Altug MS, Muharremoglu A (2011) Inventory management with advance supply information. Internat. J. Production Econom. 129(2):302-313.
4. Aviv Y (2001) The effect of collaborative forecasting on supply chain performance. Management Sci. 47(10):1326-1343.
5. Aviv Y (2002) Gaining benefits from joint forecasting and replenishment processes: The case of auto-correlated demand. Manufacturing Service Oper. Management 4(1):55-74.
6. Aviv Y (2007) On the benefits of collaborative forecasting partnerships between retailers and manufacturers. Management Sci. 53(5):777-794.
7. Boyaci T, Özer O (2010) Information acquisition for capa planning via pricing and advance selling: When to stop and act? Oper. Res. 58(5):1328-1349.
8. Cachon GP, Lariviere MA (2001) Contracting to assure supply: How to share demand forecasts in a supply chain. Management Sci. 47(5):629-646.
9. Chen F (1999) Decentralized supply chains subject to information delays. Management Sci. 45(8):1076-1090.
10. Chen L, Lee HL (2009) Information sharing and order variability control under a generalized demand model. Management Sci. 55(5):781-797.
11. Cohen MA, Ho TH, Ren ZJ, Terwiesch C (2003) Measuring imputed cost in the semiconductor equipment supply chain. Management Sci. 49(12):1653-1670.
12. Dixit A, Pindyck R (1994) Investment Under Uncertainty (Princeton University Press, Princeton, NJ).
13. Economist, The (2012) Boeing: The plane maker struggles to fulfill a rush of orders. (January 28).
14. Files J (2001) Economic downturn leaves Cisco with stacks of excess inventory. San Jose Mercury News (April 27).
15. Gallego G, Özer O (2001) Integrating replenishment decisions with advance demand information. Management Sci. 47(10): 1344-1360.
16. Graves SC, Kletter DB, Hetzel WB (1998) A dynamic model for requirements planning with application to supply chain optimization. Oper. Res. 46(3):35-49.
17. Graves SC, Meal HC, Dasu S, Qiu Y (1986) Two-stage production planning in a dynamic environment. Axäter S, Schneeweiss C, Silver E, eds. Multi-Stage Production Planning and Control, Lecture Notes in Economics and Mathematical Systems, Vol. 26 (Springer-Verlag, Berlin), 9-43.
18. Ha A, Tong S (2008) Contracting and information sharing under supply chain competition. Management Sci. 54(4):701-715.
19. Hausman, WH (1969) Sequential decision problems: A model to exploit existing forecasters. Management Sci. 16(2):B93-B111.
20. Hausman WH, Peterson R (1972) Multiproduct production scheduling for style goods with limited capa, forecast revisions and terminal delivery. Management Sci. 18(7):370-383.
21. Heath DC, Jackson PL (1994) Modeling the evolution of demand forecasts with application to safety stock analysis in production/ distribution systems. IIE Trans. 26(3):17-30.
22. Iida T, Zipkin PH (2010) Competition and cooperation in a two-stage supply chain with demand forecasts. Oper. Res. 58(5):1350-1363.
23. Jullien B (2000) Participation constraints in adverse selection models. J. Econom. Theory 93(1):1-47.
24. Kostamis D, Duenyas I (2011) Purchasing under asymmetric demand and cost information: When is more private information better? Oper. Res. 59(4):914-928.
25. Kurtulu̧s M, Ülkü S, Toktay BL (2012) The value of collaborative forecasting in supply chains. Manufacturing Service Oper. Management 14(1):82-98.
26. Lee HL, So KC, Tang CS (2000) The value of information sharing in a two-level supply chain. Management Sci. 46(5):626-643.
27. Lutze H, Özer O (2008) Promised lead-time contracts under asymmetric information. Oper. Res. 56(4):898-915.
28. Maggi G, Rodriguez-Clare A (1995) On countervailing incentives. J. Econom. Theory 66(1):238-263.
29. Mirrlees JA (1971) An exploration in the theory of optimum income taxation. Rev. Econom. Stud. 38(114):175-208.
30. Myerson RB (1979) Incentive compatibility and the bargaining problem. Econometrica 79(1):61-73.
31. Myerson RB (1981) Optimal auction design. Math. Oper. Res. 6(1):58-73.
32. Oh S, Özer O (2009) Characterizing the structure of the optimal stopping policy. Working paper, University of Texas at Dallas, Richardson.
33. Özer O, Wei W (2006) Strategic commitments for an optimal capa decision under asymmetric forecast information. Management Sci. 52(8):1239-1258.
34. Özer O, Zheng Y, Chen K (2011) Trust in forecast information sharing. Management Sci. 57(6):1111-1137.
35. Philippon T, Skreta V (2012) Optimal interventions in markets with adverse selection. Amer. Econom. Rev. 102(1):1-28.
36. Plambeck EL, Zenios SA (2000) Performance-based incentives in a dynamic principal-agent model. Manufacturing Service Oper. Management 2(3):240-263.
37. Riley J, Zeckhauser R (1983) Optimal selling strategies: When to haggle, when to hold firm. Quart. J. Econom. 98(2):267-289.
38. Sapra A, Jackson PL (2013) On the equilibrium behavior of a supply chain market for capa. Manufacturing Service Oper. Management 15(1):132-147.
39. Schoenmeyr T, Graves SC (2009) Strategic safety stocks in supply chains with evolving forecasts. Manufacturing Service Oper. Management 11(4):657-673.
40. Shin H, Tunca TI (2010) Do firms invest in forecasting efficiently? The effect of competition on demand forecast investments and supply chain coordination. Oper. Res. 58(6):1592-1610.
41. Skreta V (2006) Sequentially optimal mechanisms. Rev. Econom. Stud. 73(4):1085-1111.
42. Taylor TA, Xiao W (2010) Does a manufacturer benefit from selling to a better-forecasting retailer? Management Sci. 56(9): 1584-1598.
43. Tirole J (2012) Overcoming adverse selection: How public intervention can restore market functioning. Amer. Econom. Rev. 102(1):29-59.
44. Toktay LB, Wein LM (2001) Analysis of a forecasting-productioninventory system with stationary demand. Management Sci. 47(9):1268-1281.
45. Wang Y, Tomlin B (2009) To wait or not to wait: Optimal ordering under lead time uncertainty and forecast updating. Naval Res. Logist. 56(8):766-779.
46. Zhang H, Zenios S (2008) A dynamic principal-agent model with hidden information: Sequential optimality through truthful revelation. Oper. Res. 56(3):681-696.