Date: May 27, 2014

Time: 9:30 am

Venue: Room 1002, Administration Building, Zijingang Campus

Speaker: SHOU Prof. Biying, Assistant professor, City University of Hong Kong.

Topic: Consumer Panic Buying and Quota Policy under Supply Disruptions

Host: Associate Prof.JIN Qingwei，Department of Management Science and Engineering， ZJUSOM

Abstract: We study consumer panic buying under supply disruptions and investigate how the retailer should adjust inventory and quota policies to respond to panic buying. First, we examine the impact of different factors on consumer decisions and illustrate the rationales behind the seemly irrational panic buying behavior. We identify a threshold for consumer product valuation above which a consumer tends to stockpile product for future consumption. Then we conduct rational expectations equilibrium analysis to characterize the retailer's inventory policy and show how it is affected by disruption risk, production valuations and consumers' risk attitude. Furthermore, we evaluate the cost of ignoring consumer behavior. Interestingly, we find that the cost is the most significant (as much as 25% of profit) when supply risk is intermediate. Finally, we examine the effectiveness of limiting consumer purchasing quota for the retailer with limited capacity, and show when quota policy is beneficial to the retailer.

About the Speaker: Biying Shou is an Assistant Professor of Management Sciences at City University of Hong Kong. She received B.E. from Tsinghua University and M.S. and Ph.D. from Northwestern University, USA. Her main research interests include operations and supply chain management, marketing and operations interface, and network economics. She is currently a board member of College of Business at City University of Hong Kong. She also serves as the secretary of the POMS-HK chapter.