Panos Kouvelis

Washington University in St. Louis | WUSTL , Wash U · The Boeing Center for Supply Chain Innovation

Problem definition: We model the development of effective agricultural supply chains (agri-chains) in emerging economies for better utilization of land and intermediate processing resources for harvested export-oriented goods. We study decisions made by farmers, intermediate processors, and government officials in agri-chains. The structure and man...

We consider a two‐stage project supply chain with a downstream project firm producing an engineer‐to‐order (ETO) complex product or a make‐to‐order (MTO), low‐volume, customized industrial product as a project, and an upstream contract supplier supplying a key material to the project. The project faces two uncertainties: project activity time uncer...

Problem definition: The narrow definition of supply chain finance (SCF) as a financing scheme for accounts receivables fails to capture the knowledge creation of MSOM research scholars of the last 25 years who labored in the area under this label. A redefined definition of the research-and-application field, under the acronym integrated SCF (iSCF),...

Several features of automotive procurement distinguish it from the prototypical supply chain in the academic literature: pass-through pricing that reimburses suppliers for raw material costs, market frictions that prohibit cost transparency and imbue suppliers with pricing power, and contractual commitments that span multiple production periods. In...

Problem definition: We study a dynamic finishing-stage planning problem of a pork producer who at the beginning of each week gets to see how many market-ready hogs she has available for sale and the current market prices. Then, she must decide which hogs to sell to a meatpacker and on the open market and which hogs to hold until the following week....

Vertical information-sharing literature in supply chains, either a bilateral chain or one supplier with multiple Cournot-competing buyers, has argued that voluntary (public) information sharing is not a Nash equilibrium. Our work argues that in some industrial settings with the presence of uncertain cash flows limiting operational investments, the...

Problem definition: This paper studies an entrepreneur’s pricing strategy in a reward-based crowdfunding campaign under asymmetric product quality information. We propose two signaling mechanisms and investigate how entrepreneurs can leverage their pricing strategy to signal a high-quality project. Academic/practical relevance: This problem is rele...

We study a long‐term service agreement (LTSA) between an OEM of a conventional power generator and a utility firm in the electricity supply chain. The OEM offers the LTSA to the utility firm which specifies the service fee and the maintenance interval. The utility firm dynamically chooses among different resources (conventional, renewable, or emerg...

This chapter summarizes the last 8 years of collaborative research of a global group of scholars on supply chain management and especially on how companies are dealing with uncertainties and disruptions. Starting with analyzing the factors that drive changes in global supply chain designs, this chapter describes how companies are coping with new ty...

In this paper, we introduce and study the joint inventory selection and online resource allocation problem, which is characterized by two sequential sets of decisions that are irrevocably linked. First, a decision maker must select starting inventory levels for a set of available resources. Subsequently, the decision maker must match arriving custo...

Previous studies on horizontal outsourcing between competing duopolists emphasize cost factors, such as economies of scale and/or variable cost advantages in Cournot markets, as potential explanations. Our paper studies horizontal outsourcing when two competing firms engage in Bertrand competition, and highlights the important role of sole sourcing...

Recent research has documented that companies are pursuing a variety of strategies to enhance supply‐chain resilience. This paper examines how managers actually think about resilience strategies, and then analyzes the relationship between operations, supply‐chain characteristics, and the implemented strategies. We define a “Triple‐P” framework that...

Problem description. We consider a dual channel in which a focal manufacturer (he) sells his output through his online store and an independent brick-and-mortar retailer (she). In this manufacturer-centric dual channel, we study product line, stocking, and pricing decisions in the presence of stochastic demand and inventory constraints. The pricing...

Our work offers an understanding of how capital efficiency metrics, such as Return-on-Investment (ROI), affect orders at a stand-alone single stocking stage under demand uncertainty or within bilateral supply chains of a supplier and buyer interacting with the use of a trade-credit-contract. In both environments, the buyer is looking for financing...

Problem definition: We consider opportunities for cooperation at the supply level between two firms that are rivals in the end-product market. One of our firms is vertically integrated (VI), has in-house production capabilities, and may also supply its rival. The other is a downstream outsourcing (DO) firm that has better market information. The DO...

In the early onset of the COVID-19 pandemic in the U.S., consumers experienced surprising shortages of essential goods such as toilet paper, yeast and flour, and some of their favorite meat cuts that appeared to be unrelated to the pandemic at first look. The “usual” explanations attributing these shortages to “demand spikes” (e.g., foreign supplie...

Factoring is a financial arrangement where the supplier sells accounts receivable to the factor against a premium and receives cash for immediate working capital needs. Reverse factoring takes advantage of the retailer’s payment guarantee and the credit rating differential between a small supplier and a large retailer, enabling the supplier to rece...

Price postponement is an effective mechanism to hedge against the adverse effect of supply random yield. However, its effectiveness and the resulting production decisions have not been studied for risk-averse firms. In this paper, we investigate the impact of price postponement and risk aversion under supply yield risk. Specifically, we study a ris...

Financial hedging of raw material prices and exchange rates has become an integral part of many manufacturers' operating practices. Previous empirical research suggests that a desire to avoid financial distress and the affiliated curtailment in operations is one of the strongest hedge motivations. Taking the hedging motivation as given, we examine...

What are the attributes of the best‐performing supply chains? According to Lee (2004), the best supply chains are agile, adaptable, and ensure the interests of all participating companies stay aligned, that is, The Triple‐A framework. Fifteen years later, we find global supply chains exposed, with an increasing frequency and alarming severity, to l...

Factoring is a financial arrangement where the supplier sells accounts receivable to the factor against a premium, and receives cash for immediate working capital needs. Reverse factoring takes advantage of the retailer's payment guarantee and the credit rating differential between small supplier and large retailer, enabling the supplier to receive...

We analytically study a value chain consisting of three independent parties: a manufacturer, a retailer, and a sales agent. Either the manufacturer or the retailer may compensate the sales agent, and a variety of supply contracts may be used between the manufacturer and the retailer: price‐only, buyback, and channel rebate. We first compare the eff...

Advances in Supply Chain Finance and FinTech Innovations examines three themes: Financing Issues in Supply Chains look into popular working capital management financing practices: trade credits and guarantor practices including advanced trade credit practices in supply chains, guarantor financing practices for capital constrained retailers, and inn...

Problem Description: A price match guarantee (PMG) is a retail offer to match a rival's retail price on the same product. We ask whether or not a brick-and-mortar retailer should offer a PMG, knowing that a consumer can buy the same product either from her or a competing, manufacturer-owned online store. Academic/Practical Relevance: We provide a n...

The past three decades have witnessed tremendous growth of supply chain activities around the globe thanks to the lowered trade barriers and free trade agreements among countries. The global supply chain management literature developed during this time provided theoretical frameworks and decision support tools for operational and supply chain decis...

In some industries (e.g., semiconductors, electronics, and agribusiness), buyers place noncommitted orders (called soft orders) to manufacturers in an effort to guide the manufacturer's production decisions. After the buyers know their own demand, they place purchase orders (called firm orders). These orders are often placed very close to the produ...

We consider under what conditions a revenue sharing contract is most effective at improving system efficiency relative to a simple wholesale price contract. We find that a complex coordinating contract is not always necessary because the wholesale price contract may perform sufficiently well; and coordinating contracts are not always effective if d...

We study cash flow risk hedging in a bilateral supply chain of a supplier and a manufacturer that use internal cash to invest in production efficiency improvements. The associated production efficiency function is convex in capital investment. We offer a conceptual framework for understanding supply chain cash hedging strategies by decomposing the...

We study a newsvendor problem with profit risk control using Value-at-Risk (VaR) constraints. When a firm's demand correlates with the price of a tradable financial asset, both financial tools (derivatives) and operational tools (inventory) can be used for profit risk management. Such integrated risk management (IRM) approaches have been studied us...

We study a newsvendor problem with profit risk control using Value-at-Risk (VaR) constraints. When a firm’s demand correlates with the price of a tradable financial asset, both financial tools (derivatives) and operational tools (inventory) can be used for profit risk management. Such in- tegrated risk management (IRM) approaches have been studied...

We study hedging cash-flow risks in a supply chain where firms invest internal funds to improve production efficiencies. We offer a decomposition framework to capture the cost-reduction and flexibility effect of hedging. It allows us to understand how a firm’s hedging choice depends on its supply chain partner’s decision, and how such interaction i...

Problem definition: Manufacturing firms are undergoing restructuring defined by a collection of adjustments and decisions, which affect the source and destination of manufactured products throughout the firm's global supply chain network. We report on a comprehensive picture of manufacturing sourcing on a global basis. Academic/practical relevance:...

We study the price competition among multiple branded drug manufacturers when their drugs are distributed through a common Pharmacy Benefit Manager (PBM). The PBM develops a drug benefit plan for its clients, which includes a formulary list that specifies the copayment for each branded drug, and a list of prices to be charged to the clients for eac...

In this paper, we propose two technical assumptions to ensure the unimodality of the objective functions in two classes of price and quantity decision problems with one procurement opportunity under supply random yield and deterministic demand in a price‐setting environment. The first class of problems involves a decentralized supply chain/assembly...

We consider a firm purchasing a storable raw material commodity from a spot market with volatile commodity prices and the access to an associated financial derivatives market. The purchased commodity is processed into an end product with uncertain demand and lost sales. The firm aims to integrate the inventory replenishment and financial hedging de...

Interface of finance, operations, and risk management (iFORM) is a relatively new research area dealing with timely, complex, and boundary-spanning issues in a variety of settings from start-ups to global enterprises. iFORM research addresses ways to better integrate physical, financial, and informational flows by combining the operational choices...

Problem description: We study the impact of credit ratings on operational and financial decisions of a supply chain with a supplier and a retailer interacting via an early payment discount contract. The retailer has a single opportunity to order a product from the supplier to satisfy future uncertain demand. Both the retailer and supplier are capit...

Problem description: Purchase costs of raw materials required in production tend to fluctuate over time. Mild cost fluctuations merely affect firms’ profitability. Significant variations can lead to supply chain disruption. What are the best contracts to be used in supply chains exposed to fluctuating raw material costs? We ask this question in two...

We study the production decisions of a firm that operates a co-production system (single input but multiple simultaneous outputs) with random yield and demand. The firm uses its outputs to meet multiple end-market demands with different quality requirements. Outputs serving a market segment may be a result of a blending process of different quality...

Phase III clinical trials are expensive and require enrolling and treating hundreds or thousands of patients at many sites. The time and cost required to do so are uncertain, as is the economic value of the drug upon completion. We consider the problem of determining when and how many test sites should be opened and the rate at which patients shoul...

Discretionary commonality is a form of operational flexibility used in multi-product manufacturing environments. Consider a case where a firm produces and sells two products. Without discretionary commonality, each product is made through a unique combination of input and production capacity. With discretionary commonality, one of the inputs could...

Integrated Risk Management in Supply Chains examines supply chain risk management. The increased interest in the topic is due to a number of factors including the increased volatility of commodity prices and exchange rates, recent natural disasters, and the increased importance of multinational corporations. The motivation for risk management comes...

Supply Chain Finance focuses is on creating liquidity in the supply chain through various Buyer or Seller-led solutions with or without a facilitating technology. The role of supply chain finance (SCF) is to optimize both the availability and cost of capital within a given buyer-supplier supply chain. To add further value, information on the physic...

Prior experimental research shows that, in aggregate, decision makers acting as suppliers to a newsvendor do not set the wholesale price to maximize supplier profits. However, these deviations from optimal have rarely been examined at an individual level. In this study, presented with scenarios that differ in terms of how profit is shared between r...

Problem description: Purchase costs of raw materials required in production tend to fluctuate over time. Mild cost fluctuations merely affect firms' profitability. Significant variations can lead to supply chain disruption. What are the best contracts to be used in supply chains exposed to fluctuating raw material costs? We ask this question in two...

This paper studies the optimal component procurement strategies of two competing OEMs selling substitutable products. The OEMs outsource their production to a common contract manufacturer , who in turn needs an input from a component supplier. Each OEM may either directly procure the input from the component supplier, or delegate the procurement ta...

This paper reports on the results of a global field study conducted in 2014 and 2015 among leading manufacturers from a wide range of industries. It provides insights on managerial practices that concern production sourcing and on the factors that drive such decisions. Exploratory factor analysis and logistic regression models that use survey respo...

We study contract design and coordination of a supply chain with one supplier and one retailer, both of which are capital constrained and in need of short-term financing for their operations. Competitively priced bank loans are available, and the failure of loan repayment leads to bankruptcy, where default costs may include variable (proportional t...

We consider how a firm should ration inventory to multiple classes in a stochastic demand environment with partial, class-dependent backlogging where the firm incurs a fixed setup cost when ordering from its supplier. We present an infinite-horizon, average cost criterion Markov decision problem formulation for the case with zero lead times. We pro...

We model the competition among multiple pharmacy benefit managers (PBMs) for the patronage of a client organization. Each PBM selects a list of prices to be charged to the client organization for each of the branded and generic drugs within a therapeutic class (price decision) and a formulary list that assigns branded drugs to preferred or nonprefe...

This paper explores the merits of hedging stochastic input costs (i.e., reducing the risk of adverse changes in costs) in a decentralized, risk neutral supply chain. Specifically, we consider a generalized version of the well-known 'selling-to-the-newsvendor' model in which both the upstream and the downstream firms face stochastic input costs. The...

This paper studies the optimal component procurement strategies of two competing OEMs selling substitutable products. The OEMs outsource their production to a common contract manufacturer, who in turn needs an input from a component supplier. Each OEM may either directly procure the input from the component supplier, or delegate the procurement tas...

This article analyzes a complex scheduling problem at a company that uses a continuous chemical production process. A detailed mixed-integer linear programming model is developed for scheduling the expansive product line, which can save the company an average of 1.5% of production capacity per production run. Furthermore, through sensitivity analys...

Refining is indispensable to almost every natural-resource-based commodity industry. It involves a series of complex processes that transform inputs with a wide range of quality characteristics into refined finished products sold to end markets. In this paper, we take the perspective of a profit-maximizing refiner that considers upgrading its exist...

Integrated device manufacturers (IDMs) and foundries are two types of manufacturers in the semiconductor industry. IDMs integrate both design and manufacturing functions whereas foundries solely focus on manufacturing. Since foundries often have cost advantage over IDMs due to their specialization and economies of scale, IDMs have incentives to sou...

This paper investigates the impact of operational flexibility on firms' economic exposure to currency fluctuations in the presence of global competition. We consider a global firm who sells as a monopolist in the domestic market, and also sells to a foreign market facing competition from a local competitor of certain capacity. We compare the effect...

We study various definitions of robustness in a discrete scenario discrete optimiza- tion setting. We show that a generalized definition of robustness into which scenario weights are introduced can be used to identify the ecient solutions of multiple objec- tive discrete optimization problems. We show that the solution of a pair of optimization pro...

We consider coordination issues in supply chains where supplier's production process is subject to random yield losses. For a simple supply chain with a single supplier and retailer facing deterministic demand, a pay back contract which has the retailer paying a discount price for the supplier's excess units can provide the right incentive for the...

In this article, we study a firm's interdependent decisions in investing in flexible capacity, capacity allocation to individual products, and eventual production quantities and pricing in meeting uncertain demand. We propose a three-stage sequential decision model to analyze the firm's decisions, with the firm being a value maximizer owned by risk...

We study the facility network design problem for a global firm that is a monopolist seller in its domestic market but faces local competition in its foreign market. The global firm produces in the face of demand and exchange rate uncertainty but can postpone localization and distribution of the output until after uncertainties are resolved. The com...

Motivated by the dual-sourcing and contracting practices in the semiconductor industry, we study two prevailing types of contracts that deal with horizontal-capacity-coordination issues between two possible sources: an integrated device manufacturer IDM and a foundry. IDMs both design and manufacture semiconductor devices, whereas foundries concent...

The authors quantify the benefits of a newly introduced logistics product, day-definite Full Container-load FCL, in terms of its cost reduction relative to other existing products-regular FCL and airfreight, from the perspective of a logistic manager in an intercontinental supply chain facing lead-time uncertainties. Numerical examples and sensitiv...

We study how to manage commodity risks price and consumption volume via physical inventory and financial hedge in a multiperiod problem with an interperiod utility function for a risk-averse firm procuring a storable commodity from a spot market at a random price and a long-term supplier at a fixed price. The firm also has access to financial contr...