2015 Informs Annual Meeting

MA48

INFORMS Philadelphia – 2015

2 - An Approximation for the Bed Occupancy Process in Inpatient Wards Ohad Perry, Northwestern University, 2145 Sheridan Road, Evanston, IL, 60208, United States of America, ohad.perry@northwestern.edu We consider queueing dynamics of bed-occupancy processes in inpatient wards. These are time varying, and have departures that are highly concentrated within a short time period each day, following the physicians’ daily inspection round. We characterize a necessary and sufficient condition for the system to be stable, and employ a fluid approximation to prove an asymptotic periodic behavior of the system. That ``periodic equilibrium’’ can be used to optimize systems’ performance. 3 - Operations Management of a Stool Bank for Fecal Transplantations Abbas Kazerouni, Stanford University, Electrical Engineering Department, Stanford, CA, United States of America, abbask@stanford.edu, Lawrence Wein We describe our work with OpenBiome, a nonprofit firm that enables fecal transplants for treating Clostridium difficile, which is responsible for 25,000 deaths and $1 billion annually in the U.S. We optimize the timing of new donor acquisitions and the individualized (based on donor production rate) testing frequency for each donor, with the goal of meeting nonstationary demand (increasing at 10% per month) at minimum cost. 4 - Queues with Time-varying Arrivals and Inspections with Applications to Hospital Discharge Policies Carri Chan, Columbia Business School, 3022 Broadway, Uris Hall, Room 410, New York, NY, 10027, United States of America, cwchan@columbia.edu, Linda Green, Jing Dong To discharge a patient from a hospital unit, a physician must determine that the patient is stable enough to be discharged. As such, patients may occupy a bed longer than medically necessary. Motivated by this phenomenon, we introduce a queueing system with time-varying arrival rates in which servers who have completed service cannot be released until an inspection occurs. We examine how such a dynamic impacts system dynamics and consider how to optimize the timing of inspections. MA47 47-Room 104B, CC MSOM Sustainability and Energy Sponsor: Manufacturing & Service Oper Mgmt/Sustainable Operations Sponsored Session Chair: Yangfang Zhou, Assistant Professor, Lee Kong Chian School of Business, Singapore Management University, Singapore, Singapore, helenzhou@smu.edu.sg 1 - Investments in Renewable and Conventional Energy: Role of Operational Flexibility Kevin Shang, Duke University, 100 Fuqua Drive, Durham, NC, United States of America, kevin.shang@duke.edu, Gurhan Kok, Safak Yucel We study investments of a utility firm in renewable and conventional energy sources with different levels of operational flexibility, i.e., the ability to quickly ramp up or down the output of a generator. We consider supply characteristics of conventional and renewable sources to investigate their interaction with each other. We find that inflexible sources (e.g., nuclear energy) and renewables are strategic substitutes; flexible sources (e.g., natural gas) and renewables are complements. 2 - Promoting Clean Technology Products: to Subsidize Consumers or Manufacturer? Ho-Yin Mak, University of Oxford, Said Business School, Park End Street, Oxford, United Kingdom, makho06@gmail.com, Guangrui Ma, Michael Lim, Zhixi Wan We study the dynamic adoption process of Clean Technology Products, which is often hampered by the chicken-and-egg dilemma: at the early stage of commercialization, firms are reluctant to invest in support infrastructure before sufficient consumers adopt the products; on the other hand, consumers hesitate to adopt the products without such infrastructure. We study two lines of widely- discussed policy instruments, government subsidies and mandated information disclosure, to tackle this dilemma.

3 - Is Electricity Storage “GREEN”? A Case Study with Commercial Buildings for Reducing Demand Charge Yangfang Zhou, Assistant Professor, Lee Kong Chian School of Business, Singapore Management University, Singapore, Singapore, helenzhou@smu.edu.sg Electricity storage systems, e.g., grid-scale industrial batteries, are known in the literature to increase carbon emission when used for arbitrage. However, we show that when these storage systems are used for reducing demand charge (on peak load), they can potentially decrease carbon emission. We model the problem of managing electricity storage and solar panels in a commercial building (e.g., those for hotels, banks, and supermarkets), and examine the “greenness” of storage with real data. 4 - Dynamics of Capacity Investment in Renewable Energy Projects John Birge, Professor, University of Chicago Booth School of Business, 5807 S Woodlawn Ave, Chicago, IL, 60637, United States of America, john.birge@chicagobooth.edu, Nur Sunar We study the dynamics of the capacity investment for renewable power generators. Using a continuous time Brownian model, we explicitly identify the optimal dynamic capacity investment strategy of a renewable power generator. Our analysis offers important insights for renewable power generators. We also include some numerical analysis to shed light on the optimal strategy. Supply Chain Finance and Risk Management Sponsor: Manufacturing & Service Oper Mgmt/iFORM Sponsored Session Chair: Wei Luo, IESE Business School, Av. Pearson 21, Barcelona, Spain, wluo@iese.edu Co-Chair: Kevin Shang, Duke University, 100 Fuqua Drive, Durham, NC, United States of America, kevin.shang@duke.edu 1 - The Strategic Role of Business Insurance Juan Serpa, Assistant Professor, Kelley School of Business, Indiana University, 2111 Lower Mall, Bloomington, IN, United States of America, juan.serpa@sauder.ubc.ca, Harish Krishnan We show that, in a multi-firm setting, insurance can be used strategically as a commitment mechanism to prevent excessive free-riding by other firms. In the presence of wealth imbalances, contracts alone leave wealth-constrained firms with inefficiently low incentives to exert effort, and firms with sufficient wealth with excessive incentives. Insurance allows the latter to credibly commit to lower effort, thereby mitigating the incentives of the wealth-constrained firms to free ride. 2 - Supply Chain Financing with Buy-back Contracts Facing a budget-constrained buyer, a novel approach for large suppliers is adopting buy-back financing schemes to relieve their downstream partners and reduce channel costs. We analyze the efficiency of these financing schemes, and explore their impact on operational decisions and contract design. We find that such contract agreements can improve channel efficiency significantly over traditional financing methods. 3 - Supply Chain Network Formation and Risk Propagation John Birge, Professor, University of Chicago Booth School of Business, 5807 S Woodlawn Ave, Chicago, IL, 60637, United States of America, john.birge@chicagobooth.edu, Jing Wu The structure of supply chain networks impacts firm’s performance through direct effects from shocks to linked firms as well as indirect effects from systematic risk exposure across the entire network. This talk will discuss a motivating model of network formation in this context and its implications for firms’ supply chain choices. 4 - Trade Credit and Price Elasticity of Demand Eduard Calvo, IESE School of Business, IESE, Barcelona, Spain, ECalvo@iese.edu, Wei Luo This paper investigates how price elasticity of demand impacts trade credit in virtually integrated supply chains. We derive a theoretical model wherein trade credit is expressed as a function of margins, financing costs and elasticity. Ceteris paribus, we predict that suppliers of products with higher demand elasticity should be paid earlier to unlock higher profits. We further test the model using data from a large Spanish supermarket chain and its virtually integrated suppliers. MA48 48-Room 105A, CC Tunay Tunca, University of Maryland, College Park, MD, United States of America, ttunca@rhsmith.umd.edu, Weiming Zhu

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