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Dynamic Contract under Quick Response in a Supply Chain

Dr. Lian Qi
Department Chair & Associate Professor
Rutgers Business School
Friday, April 12, 2019
2:30-3:30pm JDT 410



We investigate a dynamic contract problem in a supply chain with a manufacturer selling a seasonal product through a retailer over two periods. In period 1, which is before the selling season, neither firm knows the demand information. The manufacturer runs on the regular production mode with low production cost but long lead time. In period 2, which refers to the selling season, only the retailer can update the demand information, so information asymmetry exists in the supply chain. The manufacturer may further produce and supplement the retailer via a second contract. However, only a mode of quick response, which has a shorter production lead time but higher production cost, is viable. We analyze three models based on whether the manufacturer adopts quick response or carries inventory from period 1 to period 2. We show that the adoption of quick response may not always benefit the manufacturer due to the information rent she has to sacrifice. Interestingly, the capability of inventory carryover in addition to quick response hurts the manufacturer.


Dr. Lian Qi is the department chair and an associate professor in the Department of Supply Chain Management at Rutgers Business School.  His research interests include Supply Chain Design and Management; Production and Inventory Planning and Control; Operations Management; and Design and Analysis of Optimization Algorithms. Dr. Qi was the recipient of Junior Faculty Teaching Award and Junior Faculty Research Award at Rutgers Business School, and Outstanding Faculty Award at University of Missouri – Rolla, where he once worked. He has published papers in Production and Operations Management, Transportation Science, OMEGA, European Journal of Operational Research, and many other topic journals.