<p>With the extensive use of outsourcing and more frequent technological innovations, global supply chains become vastly stretched and dynamic networks. As a result, firms face increasingly significant challenges to managing their fragile supply networks and responding to more rapidly changing demand evolutions. In this dissertation, we analyze three aspects of these challenges and summarize the findings in three essays. The first essay considers firms' problem of managing social and environmental non-compliance risk at its sub-tier suppliers. We figure out under what circumstances the firms should delegate the sub-tier supplier non-compliance management to its direct suppliers and under what directly control. In the second essay, we analyze the firm's strategy to deal with random demand surges. We develop a new demand model that captures important non-Markov characteristics of possible random demand surge trajectories and derive the optimal safety stock and reactive capacity strategy. Eventually, we establish a useful framework for supply chain planning under a variety of surge demand characteristics (e.g., frequency, intensity, duration, and shape). In the third essay, we examine a dynamic customer-base management problem for a firm with finite capacity, when its customers are prone to disruption and retention risks. We show that the optimal base size is an adding-up-to policy and derive the firm's optimal capacity allocation policy when capacity shortage occurs. In summary, our studies in this dissertation provide useful modeling ideas, decision tools, insights, and guidance for firms to build up resilient supply chains from both the supply and demand sides.</p> / Dissertation

We study the optimal resource portfolio for a price-setter firm under a consumer choice model with supply and demand risks. The firm sells two products that are vertically differentiated, and has the option to invest in both dedicated and flexible resources. Our objective is to understand the effectiveness of the two hedging mechanisms, resource flexibility and demand management through production differentiation, under demand and supply risks. We show that the presence of consumer-driven substitution does not always reduce the need for the firm to offer differentiated products. In particular, when the firm faces demand risk and differential production costs, it might invest in the flexible resource and offer differentiated products for a wider range of parameters. Interestingly, more uncertainty (in the form of additional supply risk) does not always make the firm more eager to adopt a hedging mechanism. This depends on the relationship between resource risks, product attributes, and resource investment costs. On the other hand, when the firm invests in the flexible resource, this never completely replaces the dedicated resources, and always results in a "diverse" resource portfolio. While this happens in the supply risk setting mainly due to resource diversification advantage, it also happens in the demand risk setting due to the vertical differentiation between the products. Finally, in the absence of differential production costs, demand management by itself (without resource flexibility) becomes powerful enough to hedge against the demand risk, but not the supply risk, due to the additional resource diversification benefit of the flexible resource in the latter setting. / Ph. D.