Traditional stochastic inventory models assume full knowledge of the demand probability distribution. However, in practice, it is often difficult to completely characterize the demand distribution, especially in fast-changing markets.In this paper, we study the newsvendor problem with partial information about the demand distribution (e.g., mean, variance, symmetry, unimodality). In particular, we derive the order quantities that minimize the newsvendor's maximum regret of not acting optimally. Most of our solutions are tractable, which makes them attractive for practical application. Our analysis also generates insights into the choice of the demand distribution as an input to the newsvendor model. In particular, the distributions that maximize the entropy perform well under the regret criterion. Our approach can be extended to a variety of problems that require a robust but not conservative solution.

In this paper, we analyze the contracting issues that arise in collaborative services, such as consulting, financial planning, and IT outsourcing. Analyzing first a bilateral relationship, we assume that neither the buyer's nor the vendor's efforts are directly observable, resulting in double moral hazard. We investigate the efficiency of fixed-fee, time-and-materials, and performance-based contracts. We find that fixed-fee contracts are the least responsive to unplanned contingencies, time-and-material contracts are associated with high monitoring costs, and performance-based contracts do not incentivize agents to exert high levels of effort. We then show that our results are robust with respect to the number of vendors involved in the joint production process. On the other hand, the involvement of multiple buyers in the joint-production process creates an additional negative externality, akin to free riding, unless the vendor prescribes all buyers' actions. Our model highlights the trade-offs underlying the choice of contracts in a collaborative service environment and identifies service process design changes that improve contract efficiency.

In this paper, we quantify the efficiency of decentralized supply chains that use price-only contracts. With a price-only contract, a buyer and a seller agree only on a constant transaction price, without specifying the amount that will be transferred. It is well known that these contracts do not provide incentives to the parties to coordinate their inventory/capacity decisions. We measure efficiency with the price of anarchy (PoA), defined as the largest ratio of profits between the integrated supply chain (that is, fully coordinated) and the decentralized supply chain. We characterize the efficiency of various supply chain configurations: push or pull inventory positioning, two or more stages, serial or assembly systems, single or multiple competing suppliers, and single or multiple competing retailers.price of anarchy, supply contracts, price-only contracts, supply chain performance, supply chain design, games-group decisions, inventory production, policies, pricing

I n services, customers provide significant inputs into the production process. In particular, these inputs may be the customers themselves participating in the service delivery. Although many service firms have explored different ways of involving customers in their production process, there is no clear guideline for the design of such coproductive systems. In this paper, we develop an analytical model of joint production between a service provider and a customer and characterize how a service firm should design its coproductive system. We show that, as a task becomes more standard, it is desirable to decrease the degree of interaction between the provider and the customer by making their efforts more substitutable and to allocate most of the work to whoever is the most efficient. Conversely, as a task becomes less standard, it is optimal to increase interaction by making efforts more complementary and to balance the work allocation. Our analysis gives rise to a service-process framework with three archetypes of coproductive services: collaborative services, service factories, and self-services. We discuss the implications of our results for service process reengineering.