Xin Liu develops premium-product supply chain optimization model

The assistant professor of marketing’s co-authored research is published in the International Journal of Production Economics.

Xin Liu, assistant professor of marketing in the Martha and Spencer Love School of Business, co-authored the article, “Equilibrium decisions for multi-firms considering consumer quality preference,” which was published in the International Journal of Production Economics.

headshot of Xin Liu
Assistant Professor of Marketing Xin Liu

Liu and co-author Xiaoya Han, University of Shanghai for Science and Technology, presented the premium-product supply chain optimization model they developed as well as a case study focusing on the fashion and apparel market.

The article’s abstract reads:

“Consumer preferences for different levels of product quality have become increasingly diverse. Thus, more and more firms are providing products with a variety of quality levels, in order to satisfy consumer demands. This study develops a premium-product supply chain optimization model. The model contains multi-firms who compete in a common market. Each firm adopts a vertical integration strategy and must determine which quality levels to produce, as well as the production quantities for each level. Using the variational inequality theory, the optimization model is formulated as a variational inequality problem. This assumes that each firm seeks to maximize its profit; the problem can be efficiently solved by an Euler algorithm. A case study focusing on the fashion and apparel market is presented. Numerical results indicate that firms tend to produce more high-quality goods as consumer preferences for high-quality goods increase. Moreover, from the perspective of industry, it might not always be profitable if firms produce completely differentiated products (in terms of quality levels) as a means to reduce competition. When the level of consumer quality preference reaches a certain level, it might be more beneficial to the industry if some (but not all) firms stop producing lower-quality products.”

Liu joined Elon in 2017 after completing her doctorate in management science and engineering from University of Science and Technology of China. Her research centers around operations management, supply chain management and marketing interface.