Whitman School Supply Chain Management Professor Analyzes Risk Associated with Supply Uncertainty in Agricultural Settings

Newswise — In a recently accepted paper in Operations Research, Burak Kazaz, Steven R. Becker Professor of Supply Chain Management, Laura J. and L. Douglas Meredith Professor of Teaching Excellence and associate professor of supply chain at Syracuse University’s Martin J. Whitman School of Management, and his co-author, Dr. Scott Webster (Arizona State University, formerly Syracuse University), analyze the economic tradeoffs associated with uncertain supply of a perishable product, reviewing how risk aversion and the source of uncertainty – demand and/or supply – affect supply chain decisions.

Their paper, titled “Technical note – Price-setting newsvendor problems with uncertain supply and risk aversion,” explores how economic decisions are affected by supply uncertainty. The researchers found that when risk aversion is incorporated into the joint price and quantity decision under uncertainty, it does not create structural problems when the source of uncertainty is demand. However, risk aversion creates significant problems when the source of uncertainty stems from supply fluctuations.

The authors develop a new elasticity measure that enables scholars to solve complex supply and demand problems. Managerially, their work finds that a firm will order more and price the commodity higher when the source of uncertainty is supply. The research builds on earlier studies that demonstrated that risk-averse firms price lower and order fewer items when the source of uncertainty is demand.

About the Whitman SchoolThe Martin J. Whitman School of Management at Syracuse University was established as the College of Business Administration in 1919. In 1920, it was only the 16th collegiate business school in the nation to be accredited by the AACSB. Today, the Whitman School of Management includes programs in accounting, entrepreneurship, finance, management, marketing, real estate, retail management and supply chain management. In any given year, the Whitman School is home to nearly 2,000 doctoral, graduate and undergraduate students.

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