Vishal Gaur, associate professor of operations management, received a $67,000 grant from the National Science Foundation to better understand how volatility of prices and demand affect supply-chain risk and how to use market factors to design inventory and production systems. The three-year grant reflects a partnership between Gaur and Sridhar Seshadri and Marti Subrahmanyam at New York University, and Xiuli Chao at the University of Michigan, with separate funding being provided to each university. The team will develop forecasting mechanisms that combine past performance with data embedded in the prices of financial instruments; incorporate these forecasts in models to make supply-chain decisions; use these expressions for profit to determine how to hedge demand risk; and test the validity of the approach by developing econometric models. Gaur and co-author Seshadri also received the 2008 best paper award from Manufacturing & Service Operations Management for their paper, "Hedging Inventory Risk Through Market Instruments."
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