Karen Donohue
3-237 Carlson School
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Karen Donohue

Board of Overseers Professor
Supply Chain and Operations


  • BA 1986
    Mathematics and Economics St. Olaf College

  • MS 1989
    Industrial Engineering and Management Science Northwestern University

  • PhD 1993
    Industrial Engineering Northwestern University


  • Supply Chain Coordination
  • Behavioral Operations
  • Environmental Operations

Karen Donohue's research examines methods for coordinating inventory and distribution decisions across supply chains. She draws on a number of different methodologies in her research including stochastic modeling, game theory, and behavioral economics.

Her analytical work focuses on identifying and measuring the impact of different contractual schemes between supply chain partners and competitors.  Examples include using tiered pricing and buyback contracts to coordinate production decisions and using service-based competition schemes to incentivize suppliers to invest in higher service quality.  This research is normative in the sense that it prescribes how supply chain partners should behave, under a given set of rules, in order to maximize expected profit.  Her most recent normative research focuses on analyzing contracting schemes that a buyer can use to induce his suppliers to invest in service quality when these suppliers vary in their capacity levels and cost structures.  This research establishes a scoring rule for the buyer that can be used to incentivize custom service level targets for each supplier while maximizing profit for the buyer.

Karen's behavioral work takes a more descriptive approach by examining behavioral factors that may influence how humans make decisions in supply chain settings.  One factor she has uncovered is the notion of "coordination risk," which causes inventory managers to build up inventory even when it increases supply chain cost and order instability.  Another factor she has studied is loss aversion and its impact on contract preferences.  Her research sheds light on interactions between buyers and suppliers in competitive and cooperative settings.

Karen received B.A. degrees in Mathematics and Economics from St. Olaf College, and a M.S. and PhD. in Industrial Engineering and Management Science from Northwestern University.  Before joining the Carlson School, she served for six years on the faculty of the Wharton School at the University of Pennsylvania.  Her articles have appeared in such journals as Management Science, Operations Research, Interfaces, Production and Operations Management, and Journal of Operations Management.  She currently serves as an Associate Editor for Management Science and POMS.  Her early research was funded through an NSF Career Award.

Selected Works

“The Role of Online Intermediaries in Coordinating Industrial Surplus Chains: Operational Policy Change and Adverse Outcomes”, S. Dhanorkar, K. Donohue, and K. Linderman, working paper (2017).
“The Buyer’s Role in Improving Supply Chain Energy Efficiency”, Nguyen, Donohue, Mehrotra, to appear in Management Science (2017).
"Initiating and Sustaining Supplier Involvement in Development Projects: a Behavioral Investigation", Wuttke, Donohue, and Siemsen, to appear in Production and Operations Management (2017).
“Managing and reallocating inventory across two markets with local information”, E. Spiliotopoulou, K. Donohue, MÇ Gürbüz, and H.S. Heese, to appear in European Journal of Operational Research (2017).
"Contract Preferences and Performance for the Loss Averse Supplier: Buyback versus Revenue Sharing," Zhang, Donohue, and Cui, Management Science (2016), 62:6 , 1734-1754.
“Information Reliability in Supply Chains: the Case of Multiple Retailers”, E. Spiliotopoulou, K. Donohue, and MÇ Gürbüz, Production and Operations Management (2016), 25: 548–567.
"Repurposing Materials and Waste through Online Exchanges: Overcoming the Last Hurdle," Dhanorkar, Donohue, and Linderman, Production and Operations Management (2015), 24: 1473-1493.
"Order Stability in Supply Chains: Coordination Risk and the Role of Coordination Stock," Croson, Donohue, Katok, Production and Operations Management (2014), 23: 176-196
"The Relative Impact of Attribute, Severity, and Timing of Psychological Contract Breach on Behavioral and Attitudinal Outcomes," Eckert, Boyer, Donohue, and Ward, Journal of Operations Management (2013), 7, 31, 567-578.
"Individual Differences in the Newsvendor Problem: Behavior and Cognitive Reflection," Mortiz, Hill, and Donohue, Journal of Operations Management (2013), 1, 31, 72-85.
"Outsourcing via Service Competition," Benjaafar, Elahi, and Donohue, Management Science (2007), 53, 2, 241-259.
"Behavioral Causes of the Bullwhip Effect and the Observed Value of Inventory Information," Croson and Donohue (2006), Management Science, 52, 3, 323-336. -- winner of INFORMS Behavioral Process Management Section's Most Influential Paper Award 2007.
"Behavioral Operations Management:Assessing Recent Findings and Revisiting Old Assumptions," Bendoly, Donohue, and Schultz, Journal of Operations Management (2006), 24, 6, 737-752.
"Upstream versus Downstream Information and its Impact on the Bullwhip Effect," Croson and Donohue, Systems Dynamics Review (2005), 12, 1, 1-11.
"An Empirical Study of Service Differentiation for Weapon System Service Parts," Deshpande, Cohen, and Donohue, Operations Research (2003), 41, 4, 5188-530..
"A Threshold Inventory Rationing Policy for Service Differentiated Demand Classes," Deshpande, Cohen, and Donohue, Management Science (2003), 49, 6, 683.
"Optimal Design of Stochastic Production Lines: A Dynamic Programming Approach," Donohue, Hopp, and Spearman, IIE Transactions (2002), 34, 10, 891-903.
"Efficient Supply Contracts for Fashion Goods with Forecast Updating and Two Production Modes," Donohue, Management Science (2000), 46, 11, 1397-1411.

Current Activities

Current Research

  • Behavioral issues in supply chain management

  • Supply chain coordination

  • Reducing environmental impact of supply chains

Editorial Appointments

  • Associate Editor, Manufacturing & Service Operations Management (M&SOM)

Honors and Awards

  • Wickham Skinner Award for Best POM Paper Published in 2016, Carlson School Faculty Research Award (2017, 2012); Carlson School Faculty Service Award (2012, 2006); INFORMS Behavioral Process Management Service Award (2008); INFORMS Behavioral Process Management Most Influential Paper Award (2007); Operations Research Meritorious Service Award, (2004, 1999, 1998); National Science Foundation Career Award (1996-2002).