published_or_final_version / Industrial and Manufacturing Systems Engineering / Master / Master of Philosophy

Song Xiping. / "August 2006." / Thesis (Ph.D.)--Chinese University of Hong Kong, 2006. / Includes bibliographical references (p. 136-142). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstracts in English and Chinese.

Chan Ying Leung. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2005. / Includes bibliographical references (leaves 85-89). / Abstracts in English and Chinese. / Chapter 1 --- Introduction --- p.1 / Chapter 1.1 --- Importance of Reverse Auctions --- p.1 / Chapter 1.2 --- A Research Gap in Existing Literatures --- p.3 / Chapter 1.3 --- Research Focus --- p.4 / Chapter 1.4 --- Contributions of This Thesis --- p.5 / Chapter 1.5 --- Organization of This Thesis --- p.5 / Chapter 2 --- Background and Literature Review --- p.6 / Chapter 2.1 --- Review of Reverse Auctions --- p.6 / Chapter 2.1.1 --- Benefits of Reverse Auctions to Buyers --- p.9 / Chapter 2.1.2 --- Types of Reverse Auctions --- p.11 / Chapter 2.1.3 --- Implementation of the Entry-fee Reverse Auction --- p.13 / Chapter 2.2 --- Linkage between the Entry-fee Reverse Auction and the Multi- period Inventory Replenishment Model --- p.16 / Chapter 2.3 --- The Multi-period Inventory Replenishment Model with TOQC --- p.17 / Chapter 3 --- The Basic Models --- p.18 / Chapter 3.1 --- Strategic Sourcing Methodology - The Entry-fee Reverse Auc- tion --- p.18 / Chapter 3.1.1 --- Numerical Example --- p.26 / Chapter 3.2 --- Operational Procurement Methodology ´ؤ The Multi-period Inventory Replenishment Model with TOQC --- p.29 / Chapter 3.2.1 --- Numerical Example --- p.33 / Chapter 3.3 --- Chapter Summary --- p.34 / Chapter 4 --- Modifications Required for Integrating the Entry-fee Reverse Auction and the Multi-period Replenishment Model with TOQC --- p.36 / Chapter 4.1 --- Formulation of the Buyer's Expected Profit Function in the Multi-period Setting --- p.37 / Chapter 4.2 --- The Existence of Optimal TOQC --- p.38 / Chapter 4.2.1 --- Convexity of the Last-period Optimality Equation --- p.39 / Chapter 4.2.2 --- Convexity of the Two-period Problem --- p.41 / Chapter 4.2.3 --- Convexity of the N-period Problem --- p.44 / Chapter 4.3 --- The Computability of the Optimal TOQC --- p.47 / Chapter 4.4 --- Chapter Summary --- p.47 / Chapter 5 --- The Revised Model --- p.48 / Chapter 5.1 --- The Entry-fee Reverse Auction in the Multi-period Setting with TOQC --- p.48 / Chapter 5.1.1 --- Numerical Example --- p.55 / Chapter 5.2 --- Chapter Summary --- p.59 / Chapter 6 --- Numerical Analysis --- p.60 / Chapter 6.1 --- Comparison between the Fixed-quantity Reverse Auction and the Entry-fee Reverse Auction --- p.60 / Chapter 6.1.1 --- Number of Supplier --- p.63 / Chapter 6.1.2 --- Retail Price --- p.65 / Chapter 6.1.3 --- Coefficient of Variation for Demand Distribution . --- p.66 / Chapter 6.1.4 --- Average Improvement --- p.67 / Chapter 6.2 --- Duration of the Entry-fee Reverse Auction Cycle --- p.68 / Chapter 6.3 --- Chapter Summary --- p.76 / Chapter 7 --- Factors of Success for Holding the Entry-fee Reverse Auction --- p.77 / Chapter 7.1 --- Internal Organizational Infrastructure of the Buyer --- p.77 / Chapter 7.2 --- Supplier's Qualifications and Control --- p.78 / Chapter 7.3 --- Attractions of the Entry-fee Reverse Auction for Suppliers . . --- p.78 / Chapter 7.4 --- Procedural Fairness --- p.81 / Chapter 7.5 --- Total Cost Analysis --- p.81 / Chapter 7.6 --- Chapter Summary --- p.82 / Chapter 8 --- Concluding Remarks --- p.83 / Bibliography --- p.85 / Chapter A --- Order Statistics --- p.90 / Chapter B --- Conditional Order Statistics --- p.92 / Chapter C --- Virtual Marginal Cost of Procurement --- p.93

In the first model, we study the optimal procurement strategy in a two-period framework when both the spot market and the forward contract are considered. The forward contract is agreed upon in the first period, and is then delivered in the second period, when the spot market is also available. This is followed by production and demand. The objective of the buyer is to minimize his expected cost. We study the problem for two scenarios: the buyer cannot and can sell to the spot market. Through our analysis, when the buyer can not sell to the spot market, there exists a threshold forward price, under which the buyer will enter into the forward contract. This threshold is lower than the expected spot price. Furthermore, we analytically show that the optimal order quantities via forward contract increase in the mean of the spot price, but decrease in the variability of the spot price. However, the buyer only speculates using the forward contract when he can sell to spot market. / In the second model, we consider a problem in which a buyer makes procurement decisions when he faces periodic random demand and two supply sources, one is a long-term contract supplier and the other is a spot market. When he procures from the contract supplier, a fixed unit price is charged and a predetermined minimum quantity for each period must be committed, and when he procures from the spot market, a stochastic spot price plus a fixed setup cost is charged. The spot price is only realized at the beginning of each period. We show that the optimal policy consists three different (s, S) type policies. More important, we identify certain conditions under which there exist monotone properties between the policy parameters and the current spot price for a general Markov spot price process. Then, we can divide the price space into three regions, each of which corresponds to a specific policy, for each period. We also conduct numerical analysis to gain more insights into how the spot market impacts the buyer's performance. We find the buyers benefits from a more volatile market. / The last model extends the second model by incorporating an important feature that is widely seen; i.e., the procurement from the contract supplier should fulfill a total order quantity commitment (TOQC). The TOQC requires the buyer to procure no less than the predetermined commitment during the contract period, which we call the planning horizon. Thus, in each period, the buyer trades off between the possible lower cost now (by procuring from the spot market) and the reduced cost in the future (by reducing the remaining commitment). Two types of commitment contracts are considered: a minimal TOQC contract and a definite quantity contract. Our analysis characterizes an optimal procurement policy which depends on the spot price in each period and an optimal virtual remaining commitment level. Such a structured policy can be viewed as a combination of some policies of base-stock type, each of which can be computed through an equivalent system without any commitment. Moreover, some of these equivalent systems are of simple multiple-period newsvendor type. This greatly simplifies the computation of the optimal policies. We also numerically analyze how the TOQC and the spot market affects the buyer's performance. / This research develops mathematical models for inventory and procurement management in the presence of spot markets. More specifically, we consider those models by incorporating different types of supply contracts. Particular attention is paid to the quantity flexible contracts. This research is an attempt to understand how firms should adopt their operating policies in the presence of fluctuating commodity prices. In this thesis, we mainly consider the following three models. / Xue, Weili. / Adviser: Youhua Chen. / Source: Dissertation Abstracts International, Volume: 72-11, Section: B, page: . / Thesis (Ph.D.)--Chinese University of Hong Kong, 2009. / Includes bibliographical references (leaves 122-134). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. [Ann Arbor, MI] : ProQuest Information and Learning, [201-] System requirements: Adobe Acrobat Reader. Available via World Wide Web.

Zhang, Nianbing. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2008. / Includes bibliographical references (leaves 113-118). / Abstracts in English and Chinese. / Chapter 1 --- Introduction --- p.1 / Chapter 1.1 --- Overview --- p.1 / Chapter 1.2 --- Motivation --- p.2 / Chapter 1.3 --- The Research Scope and Main Results --- p.4 / Chapter 1.3.1 --- The Mechanism --- p.4 / Chapter 1.3.2 --- Statement of Problem --- p.8 / Chapter 1.3.3 --- Main Results --- p.11 / Chapter 1.4 --- Structure of Research --- p.13 / Chapter 2 --- Survey of the Literature --- p.15 / Chapter 2.1 --- Overview --- p.15 / Chapter 2.2 --- E-business --- p.16 / Chapter 2.3 --- Auction --- p.18 / Chapter 2.3.1 --- Introduction --- p.18 / Chapter 2.3.2 --- Auction Theory --- p.20 / Chapter 2.3.3 --- Online Auctions --- p.21 / Chapter 2.4 --- Combination of Auction and Other Transaction Methods --- p.24 / Chapter 2.4.1 --- Auction with Posted Price --- p.24 / Chapter 2.4.2 --- Auction with Negotiation Process --- p.26 / Chapter 2.4.3 --- Auction with Noncompetitive Contract --- p.28 / Chapter 3 --- Single Unit Noncompetitive Contract --- p.29 / Chapter 3.1 --- The Model --- p.29 / Chapter 3.2 --- Strategy of Suppliers in the Auction --- p.31 / Chapter 3.3 --- Strategy of Selected Suppliers --- p.33 / Chapter 3.3.1 --- Selected Supplier of No-Information Case --- p.33 / Chapter 3.3.2 --- Supplier in Information Case --- p.40 / Chapter 3.4 --- Buyer´ةs Consideration --- p.44 / Chapter 3.4.1 --- Buyer's Cost in No-Information Case --- p.44 / Chapter 3.4.2 --- Buyer's Cost in Information Case --- p.45 / Chapter 3.4.3 --- Comparison of Costs in the Two Information Scenarios --- p.47 / Chapter 4 --- Buyer´ةs Strategy: Lower Cost and More Flexibility for Suppliers --- p.49 / Chapter 4.1 --- Is the Noncompetitive Contract Necessary --- p.50 / Chapter 4.1.1 --- No-Information Case --- p.50 / Chapter 4.1.2 --- Information Case --- p.52 / Chapter 4.2 --- Flexibility of Re-Entrance to Auction --- p.53 / Chapter 4.2.1 --- No-Information Case --- p.54 / Chapter 4.2.2 --- Information Case --- p.58 / Chapter 4.3 --- Flexibility of Making Decision After the Auction --- p.65 / Chapter 4.3.1 --- No-Information Case --- p.66 / Chapter 4.3.2 --- Information Case --- p.69 / Chapter 5 --- Multiple Noncompetitive Contracts --- p.73 / Chapter 5.1 --- No-Information Case --- p.74 / Chapter 5.1.1 --- Suppliers's Strategy --- p.74 / Chapter 5.1.2 --- Buyer´ةs Consideration --- p.76 / Chapter 5.2 --- Information Case --- p.78 / Chapter 5.2.1 --- Supplier's Strategy --- p.78 / Chapter 5.2.2 --- Computation of Buyer's Cost --- p.81 / Chapter 5.2.3 --- Comparison with the Case of One Noncompetitive Contract --- p.85 / Chapter 5.2.4 --- The Effect of Supplier´ةs Information --- p.89 / Chapter 5.3 --- General Number of Noncompetitive Contract --- p.91 / Chapter 5.3.1 --- No-Information Case --- p.91 / Chapter 5.3.2 --- Information Case --- p.94 / Chapter 6 --- Alternative Forms of Contracts --- p.96 / Chapter 6.1 --- SBIB Model --- p.97 / Chapter 6.2 --- SNIB Model --- p.98 / Chapter 6.2.1 --- Supplier's Strategy --- p.98 / Chapter 6.2.2 --- Buyer´ةs Cost in No-Information Case --- p.100 / Chapter 6.2.3 --- Buyer's Cost in Information Case --- p.103 / Chapter 6.2.4 --- Multiple Units Offered --- p.105 / Chapter 7 --- Conclusion --- p.110

The dissertation consists of a set of essays which investigate optimal contracting policies in the presence of asymmetric information and uncertainty. The first essay studies how risk aversion and a sunk investment by the firm influence the contracting outcome. The government contracts with a single, risk-averse supplier for the production of output. Both the government and the firm face uncertainty with respect to the marginal production cost of the item. Prior to full-scale production, the firm performs start-up work, during which it may make a costly investment which lowers the marginal cost of production. This cost-reducing effort is not observable by the government. At the end of the start-up phase, the firm privately learns its production cost. It then reports to the government concerning this cost, and production takes place according to the terms of the contract. The primary result concerns the effect that the firm’s investment has on the private information problem. Specifically, the investment by the firm in the start-up phase reduces the firm’s incentive to misrepresent (overstate) its cost to the government later on. From this, it follows that the firm provides a strictly smaller investment than the government would prefer under the optimal contract. The second essay examines the optimal incentive contract to offer to bidders with independent private values when it is costly for the principal to monitor the agent’s cost performance ex post. Cost sharing reduces the winner’s informational rents when the bidders possess heterogeneous private cost information but also discourages the agent from providing effort to reduce cost. In addition, if cost observation is costly for the principal, cost sharing gives the agent an incentive to pad his cost ex post. The essay investigates the consequences of this ex post adverse selection problem for the optimal incentive contract. The principle results of the analysis are as follows. First, it is demonstrated that when monitoring is costly, a low cost agent will overreport his realized cost with positive probability in equilibrium. Depending upon the cost sharing parameter, the equilibrium cost reporting and monitoring strategies may either involve pooling or a mixed strategy solution. Second, we show that the optimal contract with costly monitoring generally differs from the contract which is optimal when monitoring is costless. Depending upon the characteristics of the contracting environment, the optimal contract may induce either pooling or a mixed strategy outcome ex post. If the optimal contract involves pooling, the ‘costly monitoring’ cost sharing parameter is weakly smaller than the optimal cost sharing parameter with costless monitoring. If the optimal contract induces a mixed strategy equilibrium, the optimal level of cost sharing is strictly higher than the optimal cost sharing parameter when monitoring is costless. Finally, our model predicts that, other things equal, the level of cost sharing should be higher, the smaller the number of bidders and the more diffuse the bidder’s expected costs. / Ph. D.

This dissertation is a collection of articles on the design of procurement auctions. Chapter 1 provides a primer to the subsequent three essays. Rather than addressing all the issues involved, it illustrates some basic concepts about auctions, both institutionally and theoretically. It also highlights some problems that arise when auction theory is applied to procurement auctions. / Ph. D.