Firms often finance their inventory through debt and subsequently sell it to generate profits and service the debt. Pricing of products is consequently driven by both inventory and debt servicing considerations. We show that limited liability under debt induces sellers to charge higher prices...

We study the relation between operating flexibility and the borrowing costs incurred by a firm financing inventory investments with debt. We find that flexibility in replenishing or liquidating inventory, by providing risk shifting incentives, could lead to borrowing costs that erase more than a...

We study sourcing in a supply chain with three levels: a manufacturer, Tier 1 suppliers, and Tier 2 suppliers prone to disruption from, e.g., natural disasters like earthquakes or floods. The manufacturer may not directly dictate which Tier 2 suppliers are used, but may influence the sourcing...

Currently available medication for treating many chronic diseases is often effective only for a subgroup of patients, and biomarkers accurately assessing whether an individual belongs to this subgroup do not exist. In such settings, physicians learn about the effectiveness of a drug primarily...