Collaboration in contingent capacities with information asymmetry

We study the optimal contracting problem between two firms collaborating on capacity investment with information asymmetry. Without a contract, system efficiency is lost due to the profit‐margin differentials among the firms, demand uncertainty, and information asymmetry. With information asymmetry, we demonstrate that the optimal capacity level is characterized by a newsvendor formula with an upward‐adjusted capacity investment cost, and no first‐best solution can be achieved. Our analysis shows that system efficiency can always be improved by the optimal contract and the improvement in system efficience is due to two factors. While the optimal contract may bring the system's capacity level closer to the first‐best capacity level, it prevents the higher‐margin firm from overinvesting and aligns the capacity‐investment decisions of the two firms. Our analysis of a special case demonstrates that, under some circumstances, both firms can benefit from the principal having better information about the agent's costs. © 2007 Wiley Periodicals, Inc. Naval Research Logistics 54:, 2007     

A produce‐to‐stock system with advance demand information and secondary customers

We consider a manufacturer (i.e., a capacitated supplier) that produces to stock and has two classes of customers. The primary customer places orders at regular intervals of time for a random quantity, while the secondary customers request a single item at random times. At a predetermined time the manufacturer receives advance demand information regarding the order size of the primary customer. If the manufacturer is not able to fill the primary customer's demand, there is a penalty. On the other hand, serving the secondary customers results in additional profit; however, the manufacturer can refuse to serve the secondary customers in order to reserve inventory for the primary customer. We characterize the manufacturer's optimal production and stock reservation policies that maximize the manufacturer's discounted profit and the average profit per unit time. We show that these policies are threshold‐type policies, and these thresholds are monotone with respect to the primary customer's order size. Using a numerical study we provide insights into how the value of information is affected by the relative demand size of the primary and secondary customers. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007     

Joint pricing,assortment, and inventory decisions for a retailer's product line

Consider a set of product variants that are differentiated by some secondary attributes such as flavor, color, or size. The retailer's problem is to jointly determine the set of variants to include in her product line (“assortment”), together with their prices and inventory levels, so as to maximize her expected profit. We model the consumer choice process using a multinomial logit choice model and consider a newsvendor type inventory setting. We derive the structure of the optimal assortment for some important special cases, including the case of horizontally differentiated items, and propose a dominance relationship for the general case that simplifies the search for an optimal assortment. We also discuss structural properties of the optimal prices. Finally, motivated by our analytical results, we propose a heuristic solution procedure, which is shown to be quite effective through a numerical study. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007     

Systems failure: the US way of irregular warfare

ABSTRACT

Since 9/11, the United States has achieved notable gains against al Qaeda, and also Islamic State (IS), all while avoiding another mass-casualty attack at home. Yet, institutionally, culturally, and in its capabilities, the US government remains seriously ill-equipped for the task of countering irregular threats. Partly as a result, Islamist extremism shows no sign of being defeated, having instead metastasized since 9/11 and spread. Why, given the importance accorded to counterterrorism, has the US approach remained inadequate? What is impeding more fundamental reforms? The article evaluates the United States’ way of irregular warfare: its troubled engagement with counterinsurgency and its problematic search for lower cost and lower risk ways of combating terrorism. It suggests needed reforms but acknowledges also the unlikelihood of change.     

On Brokers,Commodification of Information and Liberian Former Combatants

ABSTRACT

This article investigates research brokers and commodification of information. When combined with inherently asymmetric research relationships and successful gatekeeping, brokers create demand and become indispensable. Potential negative effects of brokerage and commodification of information are discussed through experiences studying former combatants in Liberia. There bargains with brokers who could facilitate access to this hidden population resulted in a vicious circle as brokers confirmed what researchers wanted to hear. The attention to this issue was first brought by subsequent ethnography and participant observation, which also offer the promise of an ethically defensible way of collecting information.