SEAN LYONS, Risk-Intelligence-Security-Control (R.I.S.C.) International (Ireland)
Email: sean.lyons@riscinternational.ie

Corporate defence represents an organisation's program for self defence or self protection. This paper explains the concept in more detail and explores where business continuity fits into the corporate defence paradigm. The changing nature of corporate defence in the 21st century is discussed and the resulting opportunities which present themselves for those involved in business continuity initiatives are identified. The paper is designed to provoke a certain degree of thinking outside the box and encourage future progress in this area.

FUQIANG ZHANG, Washington University, St. Louis - John M. Olin School of Business
Email: fzhang@uci.edu

This paper studies a buyer's procurement strategies in a two-echelon inventory system with price-sensitive demand. The buyer procures a product from a supplier and then sells to the marketplace. Market demand is stochastic and depends on the buyer's selling price. The supplier's production cost is private information, and the buyer only knows the distribution of the cost. Both the buyer and the supplier can hold inventories to improve service and a periodic review inventory system is considered. The buyer takes two attributes into consideration when designing the procurement mechanism: price attribute (i.e., the total amount the buyer pays the supplier) and service-level attribute (i.e., the supplier's delivery performance). We first identify the optimal procurement mechanism for the buyer, which consists of a menu of nonlinear contracts for each of the two attributes. It can be shown that the optimal mechanism induces both a lower market demand and a lower service level compared to the supply chain optimum. In view of the complexity of the optimal mechanism, we proceed to search for simpler mechanisms that perform well for the buyer. We find that the above two attributes have different implications for procurement mechanism design: The value of using complex contract terms is generally negligible for the service-level attribute, while it can be highly valuable for the price attribute. This result provides useful insight into procurement mechanism design when both procurement price and responsive delivery are important to a buyer.

SHAOXUAN LIU, Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management
Email: liusx@sjtu.edu.cn
KUT C. SO, University of California, Irvine - Paul Merage School of Business
Email: rso@uci.edu
FUQIANG ZHANG, Washington University, St. Louis - John M. Olin School of Business
Email: fzhang@uci.edu

This paper studies the impact of supply reliability on a retail firm's performance under joint marketing and inventory decisions. The firm sells a product in a single selling season and can exert marketing effort to influence consumer demand. We develop a modeling framework to quantify the value of improving supply reliability and investigate how this value depends on different model parameters. The results in this paper provide useful insights into how firms should make investment decisions on new technologies to improve supply reliability. First, we establish a necessary and sufficient condition under which the maximum unit cost a firm is willing to pay to improve supply reliability increases in product price. It has been found that this condition would hold in most practical situations. Thus, with some caveats, our result supports the intuition that a firm is willing to pay more to improve supply reliability for products with a higher price. Next we show that with the same product price, a firm is willing to pay more to improve supply reliability for products with a higher product cost. This implies that it is not necessarily true that emerging technologies for improving supply reliability should be first adopted for products with the highest unit contribution margin. Finally, we show that a product with a lower marketing cost function always benefits more than a product with a higher marketing cost function. This finding suggests that the priority of adopting new technologies should be given to situations where the firm can effectively induce greater demand through promotional effort.