Karen Donohue

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.