News Coverage on Our Latest Research

Real world events inform the research of my group at the Supernetwork Center at the Isenberg School of Management, that I founded in 2001 and continue to direct. 

Since the onset of the COVID-19 pandemic, we have continued to model and solve a spectrum of supply chain network problems that have been affected by various disruptions, which now, sadly, for almost 2 years, have also included major disruptions to agricultural trade caused by Russia's full-scale war on Ukraine. Our research, documented in journal articles and book chapters, has continued to quantify the impacts of labor shortages and security issues and blockages associated with transportation, production capacity limitations, along with the repercussions of Russia pulling out of the Black Sea Grain Initiative. We have also investigated the impacts of numerous trade policies from tariffs to quotas and have been heavily focusing on agricultural and food supply chains and associated food insecurity.

Our research on agricultural supply chains and international trade has been enriched by our collaborations with scholars in Ukraine, through the unique, outstanding partnership between UMass Amherst and the Kyiv School of Economics (KSE) that I have blogged about.

It is very much appreciated when the research that we are involved in gets attention from the news media. 

UMass Amherst issued this release on the paper, "Ukraine – Addressing the domestic humanitarian crisis and the effects of the war on global food systems,"  that I was deeply honored to contribute to and which was presented by my KSE colleague, Professor Oleg Nivievskyi, at the Vatican in May at the Workshop on Food and Humanitarian Crises. The paper can be directly accessed here.

Also, the University World News published a very moving article by Nathan M. Greenfield: "Partnership with US scholars helps to keep Ukraine HE alive." 

In the article,  Greenfield notes our paper, "Multicommodity international agricultural trade network equilibrium: Competition for limited production and transportation capacity under disaster scenarios with implications for food security, "  just published in the European Journal of Operational Research and done with my Isenberg School PhD student Dana Hassani and KSE scholars: Professor Oleg Nivievskyi and Dr. Pavlo Martyshev. 

In addition, the article in University World News discusses the recent paper I wrote with KSE Professor Elena Besedina, "A multicommodity spatial price equilibrium model with exchange rates and non-tariff measures for agri-food international trade," which was published in Operations Research Forum.

Preprints of the above papers, as well as others of our research group can be found on the Supernetworks Center site.

Collaborations across continents during wartime help to reduce brain drain and also deepen the research insights. Very grateful for the collaborations with scholars in Ukraine, which continue. Giving enhanced visibility to scholars in Ukraine provides valuable professional and psychological support during very challenging times.

Many thanks  for the news coverage!

Very Much Looking Forward to the 2023 INFORMS Conference in Phoenix!

The 2023 INFORMS Annual Meeting is on the horizon, and is taking place October 15-18 in Phoenix, Arizona. The program is filled with numerous sessions, keynote and plenary talks, business meetings, and many award and social networking events.

I look forward to seeing colleagues from around the globe and also quite a few of my former PhD students. Dmytro Matsypura, for example, will be traveling all the way from Sydney, Australia to take part in this conference! Shivani Shukla will be coming from San Francisco, Deniz Besik from Richmond, and Sara Saberi from Worcester. Zugang "Leo" Liu will be traveling from eastern Pennsylvania.

It is also very exciting that my present Isenberg School of Management PhD student, Dana Hassani, will be speaking at this INFORMS conference, which is his first. He will be presenting our paper, "Exchange Rates and Multicommodity International Trade: Insights from Spatial Price Equilibrium Modeling with Policy Instruments via Variational Inequalities," which is co-authored with Kyiv School of Economics colleagues in Ukraine - Oleg Nivievskyi and Pavlo Martyshev. The paper was recently published in the Journal of Global Optimization. 

I will present the paper, "Defense Critical Supply Chain Networks and Risk Management with the Inclusion of Labor: Dynamics and Quantification of Performance and the Ranking of Nodes and Links," which is now in press in the  Handbook for Management of Threats: Security and Defense, Resilience and Optimal Strategies, Konstantinos Balomenos, Major Antonios Fytopoulos, and Panos Pardalos, Editors, Springer Nature, 2023.

Our talks are prepared and I am honored and delighted to be also speaking on two panels.

The above resilience panel is organized by Himadri Sen Gupta and the ITOR Editors panel by the EIC of ITOR (International Transactions in Operational Research) - Celso C. Ribeiro!

I will also be taking part in multiple Editorial Board meetings and in the meeting of the Magazine Editorial Advisory Board (MEAB) of INFORMS that I am now chairing, with the outstanding support of Kara Tucker of INFORMS and committee members.

I look forward to the INFORMS Fellows lunch and to congratulating the newly elected members.

It will also be wonderful to see the UMass Amherst INFORMS Student Chapter receive the Magna Cum Laude Award from INFORMS at this conference. Congratulations to all the student chapters who will be recognized for their activities at the conference!

Information on the INFORMS Annual Meeting in Phoenix can be found here. Seeing all the exhibits at the Convention Center will be great fun, I am sure, as well as meeting conferees at the various events and even in passing.

And, on Sunday, October 15, for a while, I will take part in an NSF Workshop on Mobility at Arizona State University with both David Boyce and Hani S. Mahmassani speaking. I have forwarded a tribute to David Boyce to the workshop organizers.

I have to also take this opportunity to congratulate Hani Mahmassani since he will be recognized at the Transportation Science & Logistics (TSL) Society business meeting in Phoenix with the Robert Herman Lifetime Achievement Award in Transportation Science! Robert Herman was his PhD advisor at UT Austin and this award is so well-deserved. Hani is an elected member of the National Academy of Engineering. 

It will be a very exciting time in Phoenix and we will manage, I hope, with the 100 degree temperature!

Do You Remember Your First Journal Article Acceptance? Celebrating Several "Firsts!"

Last Wednesday, we had the great honor of hosting the Rector of the Kyiv School of Economics (KSE) Dr. Tymofii Brik at the University of Massachusetts Amherst. The day began with a 2 hour symposium, under the auspices of the International Programs Office, which is directed by the Vice Provost for Global Affairs Dr. Trivedi Kalpen. The visit of Rector Brik and the day's events were to mark the outstanding 1 year partnership between UMass Amherst and KSE. Below is a photo taken after the symposium with 13 scholars from Ukraine zooming in and with (l-r) Professors Uzzo Muysal, Lauren McCarthy, Rector Brik, yours truly, Ina Ganguli, Alicia Johnson, Vice Provost Trivedi, and Professor Bogdan Prokopovych in front with the Ukrainian flag. The symposium consisted of introductory remarks by university leaders, as well as by Rector Brik, and had a total of 4 panels. Faculty hosts of scholars through our partnership participated and we took a joint photo featured below.

And, shortly before the very busy, inspiring day began, we received a message from Springer Nature with great news that the paper, "Exchange Rates and Multicommodity International Trade: Insights from Spatial Price Equilibrium Modeling with Policy Instruments via Variational Inequalities," co-authored by Dr. Oleg Nivievskyi and Dr. Pavlo Martyshev of KSE and by my Isenberg School of Management PhD student Dana Hassani and me, had been accepted for publication in the Journal of Global Optimization!

This is the first paper acceptance for my PhD student Dana Hassani and the first paper that we have co-authored with scholars in Ukraine that we have been working with through our partnership!

Both Dr. Nivievskyi and Dr. Martyshev spoke at our symposium on the first panel, "Agricultural Supply Chains in Ukraine in Wartime," which I moderated.

A preprint of the paper can be downloaded here.

 

We acknowledge the anonymous reviewers of our paper and the Editor for the constructive comments and suggestions on the Acknowledgment section of our paper. We also acknowledge the support provided by the UMass Amherst - KSE partnership, which has been a bright beacon of light in wartime and has helped to reduce brain drain from Ukraine.

Supply Chain Networks and Quick-Response Production under Uncertainty

In the paper, Supply Chain Outsourcing Under Exchange Rate Risk and Competition, Zugang Liu and Anna Nagurney, Omega 39: (2011) pp 539-549, we explored supply chain outsourcing decision-making under exchange rate uncertainty and competition. The paper recently made the Top 25 Hottest Articles in Decision Sciences (at number 5).

We then became interested in supply chain flexibility and associated decision-making in quick-response industries, such as fast fashion, toys, consumer electronics and personal consumers, as well as industries associated with merchandise for holidays and special events.

The result is a network modeling and computational framework that integrates stochastic programming and variational inequalities for supply chain decision-making with global outsourcing and quick-response production under demand and cost uncertainty. Our model considers multiple off-shore suppliers, multiple manufacturers, and multiple demand markets. The complete study is reported in our paper,
Supply Chain Networks with Global Outsourcing and Quick-Response Production Under Demand and Cost Uncertainty, Zugang Liu and Anna Nagurney.

Specifically, using variational inequality theory, we formulated the governing equilibrium conditions of the competing decision-makers (the manufacturers) who are faced with two-stage stochastic programming problems but who also have to cooperate with the other decision-makers (the off-shore suppliers). Our theoretical and analytical results shed light on the value of outsourcing from novel real option perspectives.

Our results reveal important managerial insights for supply chain decision-makers who are faced with decisions regarding outsourcing and quick-response production under demand and cost uncertainty:

1). For manufacturers who do not have quick-response production capability, rising demand uncertainty will increase the value of outsourcing. However, for risk-neutral decision-makers who have quick-response production capability, rising cost uncertainty will reduce the value of outsourcing.

2). Manufacturers with quick-response production can expect higher average profit and lower risk than their competitors who do not have such capability. However, these manufacturers may not have a higher chance to beat their competitors in terms of profit when the demand uncertainty is low. Moreover, they may have lower profits if the demand turns out to be at normal levels.

3). The prevalence of quick-response production will reduce the benefit.

4). Manufacturers without quick-response capability should understand that they can still be indirectly and negatively affected by the cost variations of quick-response production through market competition.

Outsourcing in Supply Chains Under Exchange Rate Risk and Competition

Offshore outsourcing refers to the practice of procuring goods or services from outside foreign suppliers rather than producing them in-house. Since outsourcing manufacturing to lower-wage countries generally reduces production costs it has been growing rapidly in the past decade. From 2000 to 2007, 70 percent of U.S. non-oil import growth was driven by imports from developing countries with imports from China alone accounting for 39 percent of the growth.

However, although offshore outsourcing can provide significant cost reduction opportunities, it also exposes supply chain firms to various risks including: foreign exchange risk, production disruption risk, quality risk, supplier default risk, etc.

Among these risks, foreign exchange risk is consistently considered to be on the list of top concerns of supply chain executives! A study by The Economist, which surveyed 500 global company executives with responsibility for risk management, showed that, in 2009, exchange rate uncertainty was ranked as the second most important risk factor next to demand uncertainty due to the economic recession. In addition, the executives ranked foreign exchange risk as their number one concern for the subsequent twelve months. In 2010, the high volatility of the euro and possible appreciation of the Chinese yuan have posed significant risks to many companies involved in offshore outsourcing and global trades.

In a recent study, completed with Professor Zugang Liu, we quantified the impact of foreign exchange rate uncertainty and competition intensity on supply chain firms who are involved in
offshore outsourcing activities. In particular, the computer-based, analytical model that we developed considers firms' decision-making regarding pricing, material procurement, offshore-outsourcing, transportation, and in-house production under competition and foreign exchange rate uncertainty. Our model allows firms to have different attitudes toward risk. Through a series of simulation examples, we were able to answer imortant questions regarding supply chain firms' pricing and outsourcing decisions, and the associated profits and risks.

The simulation results indicate that, in general, the risk-averse firm has lower profitability and lower risk than the risk-neutral firm. When the competition intensity increases, the exchange rate risks of both risk-neutral and risk-averse firms will increase, which is consistent with recent empirical findings; the profit of the risk-averse firm will always decrease; and the profits of the risk-neutral firm will decrease if exchange rate uncertainty is relatively low and will increase if exchange rate uncertainty is high.

On the other hand, when exchange rate volatility increases, the average profit of the risk-neutral firm will first increase and then become stable while the profits of risk-averse firms will always decrease. As exchange rate variability increases, the risk of the risk-neutral firm will always increase, and the risk of the risk-averse firm will increase when the firm increase prices to compensate the risks, and will decrease if the firm switches from outsourcing to in-house production.

Moreover, as the exchange rate variability becomes higher the risk-averse firm will reduce its outsourcing activities while the risk-neutral firm may increase its outsourcing activities. These results explain the phenomenon regarding how exchange rate uncertainty affects imports of developed countries.

The results in our study provide timely managerial insights for supply chain decision-makers involved in offshore outsourcing and in this highly competitive economic climate:

1. Supply chain managers should first evaluate the risk tolerance level of the firm. If the firm is more concerned about risk, it should try to differentiate its products from that of its competitors since intense competition will both reduce profitability and increase the risk.

2. They should also maintain certain in-house production capacity for operational hedging purposes when the exchange rate uncertainty is high.

3. For the firms that are not sensitive to risk, high exchange rate uncertainty may provide an opportunity for them to get an edge on the competition with more risk-averse firms. For example, when the exchange rate variability is relatively high they should expand their outsourcing operations in order to gain more market share from more risk-sensitive competitors which may help them increase average profits. However, the firms that exploit these opportunities should understand that such strategies can also cause significant risk and loss.

More background, information, and data, along with the model and computational procedure, which was utilized for the simulation examples, can be found in our paper, "Supply Chain Outsourcing Under Exchange Rate Risk and Competition," by Zugang Liu and Anna Nagurney.