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Thesis defences

PhD Oral Exam - Arka Mukherjee, Business Administration

Three Essays on the Effects of Product Recall on Decision Making

Date and time
Date & time

January 28, 2020
9 a.m. – 12 p.m.

Where
Where

Room MB 11.316
John Molson Building
1450 Guy
Sir George Williams Campus

Cost
Cost

This event is free

Organization
Organization

School of Graduate Studies

Contact
Contact

Jennifer Sachs

When studying for a doctoral degree (PhD), candidates submit a thesis that provides a critical review of the current state of knowledge of the thesis subject as well as the student’s own contributions to the subject. The distinguishing criterion of doctoral graduate research is a significant and original contribution to knowledge.

Once accepted, the candidate presents the thesis orally. This oral exam is open to the public.

Abstract

The effects of product recalls can be utterly disastrous for the firm responsible for the recall. A recalling firm may bear substantial external failure costs along with sales loss due to a tarnished goodwill. Deciding the pre-recall and post-recall advertising, price and quality are crucial for both the recalling firm and its rivals. Using a differential game theoretic modelling approach, we develop and analyze theoretical models associated with a product recall and study the effect of the same on supply chain decision making.

In our first essay, we analyze a scenario with two manufacturers under goodwill-advertising competition. Either one firm or both firms can be susceptible to recall a product, and both are aware of the recall likelihood ex-ante. We examine the pre-crisis and post-crisis equilibrium advertising efforts and effect of recall on firms' profits when firms are farsighted or “hazard myopic. We show that the variance of advertising in the two periods and the profits of the firms depend on crisis likelihood and impact. The trade-off between the likelihood of crisis and its impact explains the previous conflicting findings of the literature.

In our second essay, we investigate joint decisions of pricing and advertising for mitigating the harmful effects of a product recall on a firm and the negative spillover effect on a rival firm. We recommend the equilibrium pricing and advertising policies of the two competing firms under product recalls of different impact and likelihood. We compare the case when the focal firm is a market leader to the case when both firms are similar.

In the third essay, we define two contracts for managing “collateral damage” during a product recall. We show that adopting a cost-sharing contract can be beneficial for suppliers and manufacturers. We found that cost-sharing decisions, advertising efforts and quality efforts vary under different scenarios. There may be individual motivation for the firms to move against a contract under different crisis likelihood and impact. Nevertheless, the supply chain profit is always higher under a contract.

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