Martin Lariviere

Lariviere, Martin. 2015. Supply-chain contracting: Doughnuts to bubbles. Manufacturing & Service Operations Management (M&SOM). 18(3): 309–313.

This paper discusses the origins of the supply chain contracting literature as well as its current state. It argues that its origins go back further than many scholars realize. It also makes the case that the field expanded rapidly, creating a bubble that has largely burst. However, there have been lasting implications that affect both how we teach supply chain management and the kind of research that is done under the heading of operations management.

Lariviere, Martin and Evan L. Porteus. 2001. Selling to the Newsvendor: An Analysis of Price-Only Contracts. Manufacturing & Service Operations Management (M&SOM) . 3(4): 293-305.

We consider a simple supply-chain contract in which a manufacturer sells to a retailer facing a newsvendor problem and the lone contract parameter is a wholesale price. We develop a mild restriction satisfied by many common distributions that assures that the manufacturer's problem is readily amenable to analysis. The manufacturer's profit and sales quantity increase with market size, but the resulting wholesale price depends on how the market grows. For the cases we consider, we identify relative variability (i.e., the coefficient of variation) as key: As relative variability decreases, the retailer's price sensitivity decreases, the wholesale price increases, the decentralized system becomes more efficient (i.e., captures a greater share of potential profit), and the manufacturer's share of realized profit increases. Decreasing relative variability, however, may leave the retailer severely disadvantaged as the higher wholesale price reduces his profitability. We explore factors that may lead the manufacturer to set a wholesale price below that which would maximize her profit, concentrating on retailer participation in forecasting and retailer power. As these and other considerations can result in a wholesale price below what we initially suggest, our base model represents a worst-case analysis of supply-chain performance.

Lariviere, Martin. 2007. The BAT Case: Putting Tech Support on the Fast Track. Case 5-207-250 (KEL272).

Bruce Alfred Technologies (BAT) has built a successful business selling packaged software. Its marketing has long promised free technical support to all customers, a key point of differentiation from BAT’s competitors. However, the call center providing tech support is now in crisis. Wait times for callers are unacceptably high, leading to low customer satisfaction and negative press. BAT managers are evaluating the Fast Track Proposal, which would create two classes of calls. Fast Track calls would be promised a one-minute wait but pay for service. Standard calls would still be free but be given lower priority and have no wait time guarantee. The case considers both the operational impact of this change as well as the strategic considerations of backing away from free tech support. This case has been used both in an elective course on service operations and a core operations management class. In the former setting, the intention is to emphasize the impact of priorities and alternative ways of managing capacity. It can also be used to discuss different ways of pricing services—i.e., pay-per-transaction vs. subscription. These can still be discussed in a core class, but the case can also serve to demonstrate the basics of the relation between utilization and delay.