We consider a financially constrained supply chain in which a supplier (leader) sells products to a retailer (follower) who has no access to bank financing due to her low credit rating. However, the supplier can borrow from a bank and offer trade credit to the retailer to alleviate her financial constraint. Failure to pay off a bank loan or trade credit incurs a variable default cost. We analyze the centralized version of the supply chain to obtain new coordination requirements. We then examine whether revenue-sharing, buyback, and all-unit quantity discount contracts can coordinate our supply chain. We show that the all-unit quantity discount contract fails to coordinate. However, the revenue-sharing and buyback contracts can coordinate the supply chain, but only when the supply chain has a sufficient total working capital. Moreover, they cannot allocate profit flexibly unless the supplier has a large enough working capital. Finally, we design a generalized revenue-sharing contract that coordinates the supply chain with flexible profit allocation, and also show by numerical examples its superiority over the revenue-sharing and buyback contracts.
{"title":"Coordinating Contracts for a Financially Constrained Supply Chain","authors":"Shuang Xiao, S. Sethi, Mengqi Liu, Shi-hua Ma","doi":"10.2139/ssrn.3494508","DOIUrl":"https://doi.org/10.2139/ssrn.3494508","url":null,"abstract":"We consider a financially constrained supply chain in which a supplier (leader) sells products to a retailer (follower) who has no access to bank financing due to her low credit rating. However, the supplier can borrow from a bank and offer trade credit to the retailer to alleviate her financial constraint. Failure to pay off a bank loan or trade credit incurs a variable default cost. We analyze the centralized version of the supply chain to obtain new coordination requirements. We then examine whether revenue-sharing, buyback, and all-unit quantity discount contracts can coordinate our supply chain. We show that the all-unit quantity discount contract fails to coordinate. However, the revenue-sharing and buyback contracts can coordinate the supply chain, but only when the supply chain has a sufficient total working capital. Moreover, they cannot allocate profit flexibly unless the supplier has a large enough working capital. Finally, we design a generalized revenue-sharing contract that coordinates the supply chain with flexible profit allocation, and also show by numerical examples its superiority over the revenue-sharing and buyback contracts.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132109041","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2017-08-28DOI: 10.20472/IAC.2017.33.002
R. Ahmed
Literature reveals that clarity in communication and employing consistent process are critical for project managers to improve project performance. A limited number of studies focused on such critical factors affecting project performance. This study aims to investigate the significance of communication and project management processes in Public Sector projects. For this empirical study, cross sectional design was used to collect data collected from project managers working on projects in Pakistan. Data analysis indicates significant and positive influence of clarity in communication and employing consistent process on project performance. Findings imply that project managers with clarity in communication and establishing consistent processes have an important role in improving project performance and increasing organizational growth.
{"title":"Significance of Communication and Project Management Processes in Public Sector Projects","authors":"R. Ahmed","doi":"10.20472/IAC.2017.33.002","DOIUrl":"https://doi.org/10.20472/IAC.2017.33.002","url":null,"abstract":"Literature reveals that clarity in communication and employing consistent process are critical for project managers to improve project performance. A limited number of studies focused on such critical factors affecting project performance. This study aims to investigate the significance of communication and project management processes in Public Sector projects. For this empirical study, cross sectional design was used to collect data collected from project managers working on projects in Pakistan. Data analysis indicates significant and positive influence of clarity in communication and employing consistent process on project performance. Findings imply that project managers with clarity in communication and establishing consistent processes have an important role in improving project performance and increasing organizational growth.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"67 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131766618","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We present a flexible and scalable method for computing global solutions of high‐dimensional stochastic dynamic models. Within a time iteration or value function iteration setup, we interpolate functions using an adaptive sparse grid algorithm. With increasing dimensions, sparse grids grow much more slowly than standard tensor product grids. Moreover, adaptivity adds a second layer of sparsity, as grid points are added only where they are most needed, for instance, in regions with steep gradients or at nondifferentiabilities. To further speed up the solution process, our implementation is fully hybrid parallel, combining distributed and shared memory parallelization paradigms, and thus permits an efficient use of high‐performance computing architectures. To demonstrate the broad applicability of our method, we solve two very different types of dynamic models: first, high‐dimensional international real business cycle models with capital adjustment costs and irreversible investment; second, multiproduct menu‐cost models with temporary sales and economies of scope in price setting.
{"title":"Using Adaptive Sparse Grids to Solve High-Dimensional Dynamic Models","authors":"J. Brumm, S. Scheidegger","doi":"10.2139/ssrn.2349281","DOIUrl":"https://doi.org/10.2139/ssrn.2349281","url":null,"abstract":"We present a flexible and scalable method for computing global solutions of high‐dimensional stochastic dynamic models. Within a time iteration or value function iteration setup, we interpolate functions using an adaptive sparse grid algorithm. With increasing dimensions, sparse grids grow much more slowly than standard tensor product grids. Moreover, adaptivity adds a second layer of sparsity, as grid points are added only where they are most needed, for instance, in regions with steep gradients or at nondifferentiabilities. To further speed up the solution process, our implementation is fully hybrid parallel, combining distributed and shared memory parallelization paradigms, and thus permits an efficient use of high‐performance computing architectures. To demonstrate the broad applicability of our method, we solve two very different types of dynamic models: first, high‐dimensional international real business cycle models with capital adjustment costs and irreversible investment; second, multiproduct menu‐cost models with temporary sales and economies of scope in price setting.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124718991","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In this paper, we propose the concepts of substitutability and complementarity in discrete choice models. These concepts concern whether the choice probability of one alternative in a choice model increases or decreases with the utility of another alternative, and they play important roles in capturing certain practical choice patterns, such as the halo effect. We study conditions on discrete choice models that will lead to substitutability and complementarity. We also present ways of constructing choice models that exhibit complementary property.
{"title":"On Substitutability and Complementarity in Discrete Choice Models","authors":"Guiyun Feng, Xiaobo Li, Zizhuo Wang","doi":"10.2139/ssrn.2932816","DOIUrl":"https://doi.org/10.2139/ssrn.2932816","url":null,"abstract":"Abstract In this paper, we propose the concepts of substitutability and complementarity in discrete choice models. These concepts concern whether the choice probability of one alternative in a choice model increases or decreases with the utility of another alternative, and they play important roles in capturing certain practical choice patterns, such as the halo effect. We study conditions on discrete choice models that will lead to substitutability and complementarity. We also present ways of constructing choice models that exhibit complementary property.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124445431","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper provides a theory of endogenous network formation in over-the-counter markets based on trade competition and inventory risk balancing. A core-periphery network structure arises as an equilibrium outcome. A small number of agents emerge as core dealers to intermediate among a large number of peripheral agents. The equilibrium level of dealer entry (the size of the core) depends on the combined effect of two countervailing forces: (i) network competition among dealers in their pricing of immediacy to peripheral agents, and (ii) the benefits of a concentrated set of dealers for lowering inventory risk through their ability to quickly offset purchases against sales. The size of the dealer core grows with the total number of agents, and reaches a finite limit size in a market with infinitely many agents. The dealer sector also increases as agents become more risk tolerant. Having more dealers competing to provide liquidity lowers the equilibrium bid-ask spread, individual dealer inventory levels and turnover, but increases market-wide dealer inventory cost. From the viewpoint of market efficiency, surprisingly, dealers tend to under-compete in liquid markets, and over-compete in illiquid markets. This suggests regulation that is differentiated by asset liquidity.
{"title":"Core-Periphery Trading Networks","authors":"Chaojun Wang","doi":"10.2139/ssrn.2747117","DOIUrl":"https://doi.org/10.2139/ssrn.2747117","url":null,"abstract":"This paper provides a theory of endogenous network formation in over-the-counter markets based on trade competition and inventory risk balancing. A core-periphery network structure arises as an equilibrium outcome. A small number of agents emerge as core dealers to intermediate among a large number of peripheral agents. The equilibrium level of dealer entry (the size of the core) depends on the combined effect of two countervailing forces: (i) network competition among dealers in their pricing of immediacy to peripheral agents, and (ii) the benefits of a concentrated set of dealers for lowering inventory risk through their ability to quickly offset purchases against sales. The size of the dealer core grows with the total number of agents, and reaches a finite limit size in a market with infinitely many agents. The dealer sector also increases as agents become more risk tolerant. Having more dealers competing to provide liquidity lowers the equilibrium bid-ask spread, individual dealer inventory levels and turnover, but increases market-wide dealer inventory cost. From the viewpoint of market efficiency, surprisingly, dealers tend to under-compete in liquid markets, and over-compete in illiquid markets. This suggests regulation that is differentiated by asset liquidity.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117040433","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper we consider a Jackson type queueing network with unreliable nodes. The network consists of m < ∞ nodes, each node is a queueing system of M/G/1 type. The input flow is assumed to be the Poisson process with parameter Λ(t). The routing matrix {r_ij} is given, i, j=0,1,...,m, sum_{i = 1 } ^ m r0i ≤ 1. The new request is sent to the node i with the probability r0i, where it is processed with the intensity rate $mu_i(t,n_i(t)). The intensity of service depends on both time t and the number of requests at the node ni(t). Nodes in a network may break down and repair with some intensity rates, depending on the number of already broken nodes. Failures and repairs may occur isolated or in groups simultaneously. In this paper we assumed if the node j is unavailable, the request from node i is send to the first available node with minimal distance to j, i.e. the dynamic routing protocol is considered in the case of failure of some nodes. We formulate some results on the bounds of convergence rate for such case.
本文考虑具有不可靠节点的Jackson型排队网络。网络由m <∞节点组成，每个节点为m /G/1型排队系统。假设输入流为泊松过程，参数为Λ(t)。给定路由矩阵{r_ij}， i, j=0,1，…，m， sum_{i = 1} ^ m r0i≤1。新的请求以r0i的概率发送到节点i，在节点i中以强度率$mu_i(t,n_i(t))进行处理。服务强度取决于时间t和节点ni(t)上的请求数。网络中的节点可能会发生故障并以一定的强度速率修复，这取决于已经损坏的节点的数量。故障和维修可能单独发生，也可能同时成群发生。本文假设节点j不可用时，节点i的请求被发送到距离j最小的第一个可用节点，即在部分节点故障的情况下考虑动态路由协议。在这种情况下，我们给出了收敛速度界的一些结果。
{"title":"Analysis of Unreliable Jackson-Type Queueing Networks with Dynamic Routing","authors":"E. Kalimulina","doi":"10.2139/ssrn.2881956","DOIUrl":"https://doi.org/10.2139/ssrn.2881956","url":null,"abstract":"In this paper we consider a Jackson type queueing network with unreliable nodes. The network consists of m < ∞ nodes, each node is a queueing system of M/G/1 type. The input flow is assumed to be the Poisson process with parameter Λ(t). The routing matrix {r_ij} is given, i, j=0,1,...,m, sum_{i = 1 } ^ m r0i ≤ 1. The new request is sent to the node i with the probability r0i, where it is processed with the intensity rate $mu_i(t,n_i(t)). The intensity of service depends on both time t and the number of requests at the node ni(t). Nodes in a network may break down and repair with some intensity rates, depending on the number of already broken nodes. Failures and repairs may occur isolated or in groups simultaneously. In this paper we assumed if the node j is unavailable, the request from node i is send to the first available node with minimal distance to j, i.e. the dynamic routing protocol is considered in the case of failure of some nodes. We formulate some results on the bounds of convergence rate for such case.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114843514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate dynamic optimal control problems that feature both intervention costs with a fixed component and partially controlled regime shifts. We analyze the associated coupled systems of quasi-variational inequalities in suitable Sobolev spaces and establish a direct approach to construct the value function and optimal strategies. Our results in particular yield a numerical procedure that converges to the value function. We also provide a corresponding verification theorem that relies on minimal regularity conditions and illustrate our results and methodology using an application in optimal product management.
{"title":"Stochastic Impulse Control with Regime-Switching Dynamics","authors":"R. Korn, Yaroslav Melnyk, F. Seifried","doi":"10.2139/ssrn.2591286","DOIUrl":"https://doi.org/10.2139/ssrn.2591286","url":null,"abstract":"We investigate dynamic optimal control problems that feature both intervention costs with a fixed component and partially controlled regime shifts. We analyze the associated coupled systems of quasi-variational inequalities in suitable Sobolev spaces and establish a direct approach to construct the value function and optimal strategies. Our results in particular yield a numerical procedure that converges to the value function. We also provide a corresponding verification theorem that relies on minimal regularity conditions and illustrate our results and methodology using an application in optimal product management.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"56 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120999119","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper we investigate the applicability of the asymptotic approach developed in Fouque et al. (2000) for pricing commodity futures options in a Schwartz (1997) multi factor model, featuring both stochastic convenience yield and stochastic volatility. We show that the zero order term in the expansion coincides with the Schwartz (1997) two factor term, with expected long-term volatility replacing the constant volatility term, and provide an explicit expression for the first order correction term. Using empirical data from the natural gas futures market, we demonstrate that a significantly better calibration can be achieved by involving the correction term as compared to the standard Schwartz (1997) two factor expression. This improvement comes at virtually no extra effort.
{"title":"Pricing Commodity Futures Options in the Schwartz Multi Factor Model with Stochastic Volatility: An Asymptotic Method","authors":"Jilong Chen, C. Ewald","doi":"10.2139/ssrn.2869041","DOIUrl":"https://doi.org/10.2139/ssrn.2869041","url":null,"abstract":"In this paper we investigate the applicability of the asymptotic approach developed in Fouque et al. (2000) for pricing commodity futures options in a Schwartz (1997) multi factor model, featuring both stochastic convenience yield and stochastic volatility. We show that the zero order term in the expansion coincides with the Schwartz (1997) two factor term, with expected long-term volatility replacing the constant volatility term, and provide an explicit expression for the first order correction term. Using empirical data from the natural gas futures market, we demonstrate that a significantly better calibration can be achieved by involving the correction term as compared to the standard Schwartz (1997) two factor expression. This improvement comes at virtually no extra effort.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"18 4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115500263","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Exploration on Managerial decision making has extended from Managerial decision behaviourist approach to cognitive approach that focuses on decision processes that ensue prior to response. In neural computational simulations, each Managerial decision during decision task is represented by node of neural activity. Decision related neural activity has components of intensification of activity and decision inception for neural activity to overcome for decision to be completed. One way to investigate computational Managerial decision making is to scan positioning of Managerial decision behaviour leading to judgment point. Eye movements are central measure of Managerial decision. Eye movements are indissolubly linked to optical consideration as both are prime tools for choosing stimulating shares of chromatic prospects for enriched perceptual and rational processing. Investigating eye movements is expedient in providing evidence of orientation of Managerial decision Managerial decision behaviour replicating computational decision during decision formation. Role of eye movements, intentional or reflex, help in gaining, possessing and tracing visual inducements, during Managerial decision formation is not entirely clear. Current proof suggests that orientation of eye movement itself may not be an essential constituent. Rather, it can be as a result of intensification in contact to incitement as an e influential factor in Managerial decision formation. Purpose of present scholarship is to survey foregoing conclusions that eye movements have contributory stimulus on Managerial decision formation in a rational fashion. We review experiential studies that employ eye movement monitoring as process tracing and tracking method with gazing in Managerial decision-making research. Using Kowlerian Model, we present an investigation that explains experimental methods and analysis with contemporary eye tracking savoir-faire. This paper countenances a specific hypothesis about role of eye movements in Managerial decision Managerial decision; understanding how eye movements are premeditated, carried out notwithstanding recurrent vicissitudes in optical assortment that eye movement harvest. One major effort is understanding how should Managers’ decide, deal with risks and uncertainties, create options better than originally available, potential responses to problems and evaluate strengths and weaknesses of each prospective action using apparatus of eye tracking/tracing and gazing.
{"title":"Exposition on Eye Movements in Managerial Decision","authors":"J. Satpathy, Adyasha Das, Sandhya R Das","doi":"10.2139/ssrn.2865351","DOIUrl":"https://doi.org/10.2139/ssrn.2865351","url":null,"abstract":"Exploration on Managerial decision making has extended from Managerial decision behaviourist approach to cognitive approach that focuses on decision processes that ensue prior to response. In neural computational simulations, each Managerial decision during decision task is represented by node of neural activity. Decision related neural activity has components of intensification of activity and decision inception for neural activity to overcome for decision to be completed. One way to investigate computational Managerial decision making is to scan positioning of Managerial decision behaviour leading to judgment point. Eye movements are central measure of Managerial decision. Eye movements are indissolubly linked to optical consideration as both are prime tools for choosing stimulating shares of chromatic prospects for enriched perceptual and rational processing. Investigating eye movements is expedient in providing evidence of orientation of Managerial decision Managerial decision behaviour replicating computational decision during decision formation. Role of eye movements, intentional or reflex, help in gaining, possessing and tracing visual inducements, during Managerial decision formation is not entirely clear. Current proof suggests that orientation of eye movement itself may not be an essential constituent. Rather, it can be as a result of intensification in contact to incitement as an e influential factor in Managerial decision formation. Purpose of present scholarship is to survey foregoing conclusions that eye movements have contributory stimulus on Managerial decision formation in a rational fashion. We review experiential studies that employ eye movement monitoring as process tracing and tracking method with gazing in Managerial decision-making research. Using Kowlerian Model, we present an investigation that explains experimental methods and analysis with contemporary eye tracking savoir-faire. This paper countenances a specific hypothesis about role of eye movements in Managerial decision Managerial decision; understanding how eye movements are premeditated, carried out notwithstanding recurrent vicissitudes in optical assortment that eye movement harvest. One major effort is understanding how should Managers’ decide, deal with risks and uncertainties, create options better than originally available, potential responses to problems and evaluate strengths and weaknesses of each prospective action using apparatus of eye tracking/tracing and gazing.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129324935","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the coordination burden for firms that pursue variety as their main product strategy. We propose that product variety magnifies the tension between scale economy in production and scope economy in distribution, giving rise to complex intra-firm sourcing relationships. Sourcing complexity worsens coordination performance for the firm and poses a dilemma for organization design: A hierarchical structure with sourcing hubs reduces sourcing complexity but can create bottlenecks at the hubs. We empirically examine operations data for about 300 distribution centers within a major soft drink bottling company in 2010–2011. Results support our hypotheses, illuminating the source of complexity in multi-product firms and the challenge for organization design in managing product variety.
{"title":"Product Variety, Sourcing Complexity, and the Bottleneck of Coordination","authors":"Yue Maggie Zhou, X. Wan","doi":"10.2139/ssrn.2833551","DOIUrl":"https://doi.org/10.2139/ssrn.2833551","url":null,"abstract":"This paper studies the coordination burden for firms that pursue variety as their main product strategy. We propose that product variety magnifies the tension between scale economy in production and scope economy in distribution, giving rise to complex intra-firm sourcing relationships. Sourcing complexity worsens coordination performance for the firm and poses a dilemma for organization design: A hierarchical structure with sourcing hubs reduces sourcing complexity but can create bottlenecks at the hubs. We empirically examine operations data for about 300 distribution centers within a major soft drink bottling company in 2010–2011. Results support our hypotheses, illuminating the source of complexity in multi-product firms and the challenge for organization design in managing product variety.","PeriodicalId":275253,"journal":{"name":"Operations Research eJournal","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125156843","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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