A supplier facing the prospect of disruption has to decide whether or not to invest in restoration capability. With restoration capability, if disruption occurs, additional costly effort can be exerted to rebuild capacity, although its outcome is uncertain. We study how a firm (buyer) can use incentive mechanisms to motivate a supplier's investment in capacity restoration, and compare this approach with the traditional approach of diversifying part of the order to an expensive but reliable supplier. Under a Restoration Enhancement (RE) strategy, the buyer uses price and/or order quantity incentives to encourage the supplier's restoration investment decision. Two different cases are considered-when the incentive is committed to ex ante (prior to disruption) and when it is committed to ex post (after disruption). In contrast, under a Supplier Diversification (SD) strategy, the buyer splits orders between a reliable supplier and an unreliable supplier to hedge against the disruption risk. Here, the buyer does not provide any separate incentive to the unreliable supplier. Our analysis indicates that under the RE strategy, where the buyer offers incentives, both the buyer and the supplier (weakly) prefer the ex ante commitment over the ex post one. Furthermore, the RE strategy is preferred over the SD strategy when the unreliable supplier's restoration outcome is more predictable or when a high restoration outcome is more likely. However, the buyer's preference for the SD strategy increases as market demand increases.

In this paper, we address the optimal joint control of inventory and transshipment for a firm that produces in two locations and faces capacity uncertainty. Capacity uncertainty (e.g., due to downtime, quality problems, yield, etc.) is a common feature of many production systems but its effects have not been explored in the context of a firm that has multiple production facilities. We first characterize the optimal production and transshipment policies and show that uncertain capacity leads the firm to ration the inventory that is available for transshipment to the other location and characterize the structure of this rationing policy. Then we characterize the optimal production policies at both locations which are defined by state-dependent produceup-to thresholds. We also describe sensitivity of the optimal production and transshipment policies to problem parameters and, in particular, explain how uncertain capacity can lead to counterintuitive behavior, such as produce-up-to limits decreasing for locations that face stochastically higher demand. We finally explore, through a numerical study, when applying the optimal policy is most likely to yield significant benefits compared to simple policies. In particular, we consider two simple straw policies: 1) a policy that disallows transshipment and 2) a policy that disallows rationing and forces the two locations to transship inventory to satisfy the other location's shortage.

We consider a two-location production/inventory model where each location makes production decisions and is subject to uncertain capacity. Each location optimizes its own profits. Transshipment (at a cost) is allowed from one location to another. We focus on the question of whether one can globally set a pair of coordinating transshipment prices, i.e., payments that each party has to make to the other for the transshipped goods, that induce the local decision makers to make inventory and transshipment decisions that are globally optimal. A recent paper suggests, for a special case of our model, that there always exists a unique pair of coordinating transshipment prices. We demonstrate through a counterexample that this statement is not correct and derive sufficient and necessary conditions under which it would hold. We show that in some conditions, coordinating prices may exist for only a narrow range of problem parameters and explore conditions when this can happen. Finally, we study the effects of demand and capacity variability on the magnitude of coordinating transshipment prices.supply chain, uncertain capacity, coordination

We study the optimal distribution strategy of a supplier with limited capacity. The supplier may adopt the supplier-only role, be the solo seller in the market, or use the dual-channel strategy and compete with its downstream buyer. In comparison to the case of unlimited capacity, we show that the supplier, the buyer, and consumers may all benefit from the supplier’s limited capacity at the same time, leading to a “win-win-win” outcome. We also find that, under limited capacity, the downstream buyer may order the supplier’s entire capacity and strategically withhold some supply from being sold to the market even if there is no underlying supply-side or demand-side uncertainty. Our result points to a new form of strategic purchasing behavior by the buyer in the face of upstream and downstream competition. Interestingly, we show that while buyer withholding is always beneficial for the supplier, it can reduce the buyer’s profit under certain cases, although total supply chain profit is the first-best outcome. Also, counter to conventional antitrust concerns, buyer withholding at times may benefit consumers in spite of reduced downstream competition. Finally, in contrast to intuition, we find that the supplier’s benefit from investing in direct selling capability is highest when its capacity size is moderate and not large. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2702 . This paper was accepted by Gad Allon, operations management.

More and more attacks are found due to the insecure channel between different network domains in legacy mobile network. In this letter, we discover an attack exploiting SUCI to track a subscriber in 5G network, which is directly caused by the insecure air channel. To cover this issue, a secure authentication scheme is proposed utilizing the existing PKI mechanism. Not only dose our protocol ensure the authentication signalling security in the channel between UE and SN, but also SN and HN. Further, formal methods are adopted to prove the security of the proposed protocol.