Spring 2008 Seminar Series

DATE: April 24, 2008
LOCATION: E40-298
TIME: 4:15pm
Reception immediately following in the ORC ConferenceRoom, E40-106

SPEAKER:
Mahesh Nagarajan

TITLE
Optimal and Approximate Supplier Selection Mechanisms

ABSTRACT
We consider a class of supplier selection problems with non contractible attributes. An illustrative case is the problem faced by a buyer who has to select from one of N sellers who posses private information that is unknown ex-ante to the buyer and ex-post not contractible. We pose these problems as infinite dimensional linear programs. Direct applications of duality fail in giving insights and solutions to these problems. We use techniques that are variants of inner approximations to solve for the optimal trading mechanism as well as to analyze the performance of heuristic methods. We prove convergence properties of such problems as well as provide insights that may be of practical relevance. In this process, we compare several plausible schemes that are commonly used that include negotiations, auction type mechanisms and a combination thereof. We then extend these techniques to study certain instances of dynamic adverse selection problems with Markovian dynamics that arise in supply chain applications.