| This dissertation addresses three important problems in manufacturing and service operations management.;In Chapter 2, we study sourcing and pricing decisions of a firm with correlated suppliers and a price-dependent demand. With two suppliers, the insight---cost is the order qualifier while reliability is the order winner---derived in the literature for the case of exogenously determined price and independent suppliers, continues to hold when the suppliers' capacities are correlated. Moreover, a firm orders only from one supplier if the effective purchase cost from him, which includes the imputed cost of his unreliability, is lower than the wholesale price charged by his rival. Otherwise, the firm orders from both. Furthermore, the firm's diversification decision does not depend on the correlation between the two suppliers' random capacities. However, its total order quantity decreases as the capacity correlation increases in the sense of the supermodular order. With more than two suppliers, the insight no longer holds. That is, when ordering from two or more suppliers, one is the lowest-cost supplier and the others are not selected on the basis of their costs. We also develop a solution algorithm for the firm's optimal diversification problem.;In Chapter 3, we study sourcing decisions of price-setting and price-taking firms with two unreliable suppliers, where a price-setting firm sets the retail price and a price-taking firm takes the retail price as given. We investigate the impacts of market conditions, suppliers' wholesale prices and their reliabilities on the optimal sourcing decisions of price-setting and price-taking firms, and examine how a firm's pricing power affects these impacts. We define a supplier's reliability in terms of the "size" or the "variability" of his random capacity using the concepts of stochastic dominance. We find that the supplier reliability affects the optimal sourcing decisions differently for price-setting and price-taking firms. Specifically, with a price-setting firm, a supplier can win a larger order by increasing his reliability, it is not always so with a price-taking firm.;In Chapter 4, we consider a supply chain in which the manufacturer has two production and sales opportunities and sells the product to a retailer. The manufacturer's second-period production cost declines linearly in the first-period production quantity. We show that as the production cost learning process becomes more efficient and less stable, the traditional double marginalization problem becomes more severe. This leads to a greater efficiency loss in the decentralized channel. We propose a two-period revenue sharing contracts to coordinate the two-period dynamic supply chain. We also investigate the implications of the learning curve on the value of strategic inventory. |
