Cluster Events

Dear Professors,

The OMOR Cluster and the CERESSEC Research Center have the pleasure to invite you to our next seminar with 

Mohsen ELHAFSI - School of Business, University of California, Riverside

On Wednesday, January 28  from 12pm to 1pm

Room : N406

Title : Long-Term Procurement under Supply Risks: Incentives for Production Smoothing

Abstract : Production smoothing is critical for ensuring continuous supply, price stability, and customer satisfaction, yet it remains vulnerable to dynamic supply risks. This paper examines how firms can incentivize production smoothing within procurement relationships.We study a novel long-term procurement contract in a decentralized, two-echelon supply chain, where a risk-averse buyer sources from a supplier whose supply states are private and evolve dynamically. Using a constrained optimal control framework, we derive the optimal contract and develop a divide-and-conquer algorithm to compute its components. The optimal contract balances efficiency maximization, production smoothing, and information screening, and is characterized by front-loaded premiums and elevated early production quantities. Our contributions are threefold. (i) We identify an intertemporal linkage in production quantities: the buyer raises current production while reducing future quantities—a dynamic akin to a lever-fulcrum system. This linkage arises even when control does not influence state transitions, reflecting the buyer’s motive to control rent while smoothing production. (ii) We demonstrate a constructive role of risk aversion: the buyer’s preference for production smoothing mitigates efficiency losses from information asymmetry, narrowing the gap between second-best and first-best outcomes through a preference channel. (iii) We provide actionable guidance: the buyer’s pursuit of production smoothing to hedge against uncertainty can alleviate agency problems. We caution against the irrelevance theorem that treats post-contract private information as innocuous, and we show why buyers should moderate investments in supplier information capabilities while favoring long-term procurement relationships. By highlighting the interplay between production smoothing and information asymmetry, our results contribute to both procurement theory and managerial practice.

If you need more information, please contact matta@essec.edu.

Best regards,

***

Jannis KURTZ - University of Amesterdam 

On Thursday, February 19 from 12pm to 1pm

Room : N406

Title : New Perspectives on Explainable Optimization

Abstract :  In recent years, there has been a rising demand for transparent and explainable AI models. Although significant progress has been made in providing explanations for machine learning (ML) models, this topic has not received the same attention in the Operations Research (OR) community. However, algorithmic decisions in OR are made by complex algorithms which cannot be considered to be explainable or transparent as we will argue in this talk. To tackle this issue we present two promising concepts to provide explanations for (integer) optimization problems. In the first part we introduce the concept of counterfactual explanations and show how it can be used to calculate explanations for linear integer optimization problems. We show that the resulting problem is Sigma_2^p-hard but can be solved in reasonable time for certain special cases. In the second part we present a model-agnostic method called CLEMO which can provide explanations for any type of optimization algorithms (exact or heuristic). The idea is to approximate the input-output relationship of an optimization algorithm by an interpretable linear ML model.

If you need more information, please contact matta@essec.edu.

Best regards,