2015 Informs Annual Meeting

MB47

INFORMS Philadelphia – 2015

MB47 47-Room 104B, CC Environmentally Responsible Operations Sponsor: Manufacturing & Service Oper Mgmt/Sustainable Operations Sponsored Session Chair: Atalay Atasu, Associate Professor, Georgia Tech, 800, West Peachtree Street, Atlanta, GA, 30318, United States of America, Atalay.Atasu@scheller.gatech.edu 1 - Extended Producer Responsibility (EPR) for Pharmaceuticals Isil Alev, Georgia Tech, Atlanta, GA, United States of America, isilalev@gatech.edu, Atalay Atasu, Ozlem Ergun, Beril Toktay EPR-based approaches have gained traction for managing pharmaceutical overage. In our work, we analyze the effectiveness of these approaches, particularly Source Reduction and End-of-Pipe Control, by developing a game- theoretic model of pharmaceutical chain with a focus on factors causing overage. We uncover conditions for effective EPR implementation from the welfare perspective and obtain critical factors determining stakeholder perspectives in the pharmaceuticals context. 2 - Extended Producer Responsibility and Secondary Markets Atalay Atasu, Associate Professor, Georgia Tech, 800, West Peachtree Street, Atlanta, GA, 30318, United States of America, Atalay.Atasu@scheller.gatech.edu, Vishal Agrawal, Isil Alev EPR-based take-back legislation is the prevalent policy for several durable products such as electronics. However, existing research on EPR ignores durable nature of the products and secondary markets. Accordingly, we analyze EPR implementations in the presence of secondary markets and provide policy guidelines that can help improve the effectiveness of EPR. 3 - Optimal Service Infrastructure Planning for New Product Adoption under Network Externality Yiwei Wang, UC Irvine, 4293 Pereira Drive, Irvine, United States of America, willwangyiwei@gmail.com, Luyi Gui Introducing services that complements a new product (e.g., charging service for electric vehicles) can accelerate adoption of the new product. The success of such strategies critically depend on how service infrastructure is deployed and adjusted over the product’s life-cycle. We study this issue by a product diffusion analysis and derive insights regarding the optimal deployment strategy for complementary services. 4 - Lemons, Trade-ins, and Remanufacturing Ximin (natalie) Huang, Scheller College of Business, Georgia Institute of Technology, 800 West Peachtree, NW Atlanta, Georgia, Atlanta, GA, United States of America, ximin.huang@scheller.gatech.edu, Atalay Atasu, Beril Toktay Trade-in programs have been shown to partially mitigate the lemons problem in secondary markets. In this paper, we show when and how remanufacturing traded-in products can further improve the efficiency in secondary markets. MB48 48-Room 105A, CC Operations and Finance Interface Sponsor: Manufacturing & Service Oper Mgmt/iFORM Sponsored Session Chair: Fehmi Tanrisever, Bilkent University, Bilkent, Ankara, Turkey, tanrisever@bilkent.edu.tr 1 - Effects of Downstream Entry in a Supply Chain with Spot Market Xuan Zhao, Associate Professor, Wilfrid Laurier University, 75 University Avenue West, Waterloo, ON, Waterloo, Canada, xzhao@wlu.ca, Qi Zhang, Wei Xing, Liming Liu This paper investigates the effect of downstream entry on a two-echelon supply chain with risk-averse players in the presence of a spot market. We find that the manufacturers consider three factors in deciding contract procurement quantities: production, demand-hedging and speculation. Entry may decrease the contract input price, and thus may not always benefit the supplier and hurt the incumbent manufacturers, but it enhances the utilization of contract channel.

2 - Buyer-backed Purchase-order Financing for Suppliers Facing Yield Uncertainty Arun Chockalingam, Assistant Professor, Eindhoven University of Technology, Den Dolech 2, Eindhoven, 5612AZ, Netherlands, A.Chockalingam@tue.nl, Matthew Reindorp, Richa Jain We consider a retailer whose supplier is prone to severe yield shortfall. The threat of shortfall entails that the supplier cannot independently finance production. In a single period setting, we find that the retailer can increase profit for both parties by offering a purchase order commitment that incorporates a (partial) loan guarantee. We determine the retailer’s optimal commitment and the benefits for both parties. We show how the commitment varies with the supplier’s yield uncertainty. 3 - Integrated Risk Management in Commodity Markets Fehmi Tanrisever, Bilkent University, Bilkent, Ankara, Turkey, tanrisever@bilkent.edu.tr In this paper, we examine the integrated operating and financial hedging decisions of a value maximizing firm, in the presence of capital market frictions. We show that the working capital and the hedging policies of the firm interact with each other in a multi-period dynamic inventory model. In particular, looser working capital policies lead the managers to take relatively more speculative position in the market to maximize firm value. This issue may also be mitigated by asset based financing. 4 - The Midas Touch: Operational Flexibility and Financial Hedging in the Gold Mining Industry Panos Markou, IE Business School, Calle Maria de Moina 12 Bajo, Madrid, 28006, Spain, pmarkou.phd2016@student.ie.edu, Daniel Corsten We examine the commodity risk management strategies of gold mining firms over 36 quarters. Miners use financial hedging and operational flexibility to mitigate exposure to volatile gold prices. We find that, in line with theory, hedging reduces firm profit variance and inventory levels. On the other hand, operational flexibility increases profit variance and inventory. However, operational flexibility becomes valuable when used in a complementary fashion with financial hedging. MB49 49-Room 105B, CC Sustainability in Supply Chains Sponsor: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Suresh Muthulingam, Assistant Professor Of Supply Chain Management, SMEAL College of Business, The Pennsylvania State University, 460 Business Building, State College, PA, 16802, United States of America, sxm84@psu.edu 1 - An Analysis of Time-based Pricing in Electricity Supply Chains Asligul Serasu Duran, Northwestern University, Kellogg School of Management, 2001 Sheridan Road, 5th Floor, Evanston, IL, 60208, United States of America, a-duran@kellogg.northwestern.edu, Baris Ata, Ozge Islegen This study builds a framework for the retail electricity market to empirically evaluate the impact of time-based tariffs on the electricity supply chain. We find that optimal time-based tariffs reduce peak demand, but do not change consumers’ electricity bills significantly. Time-of-use tariffs with predetermined rates can capture most of the benefits of real-time prices. The environmental impact of time-based tariffs depends on the characteristics of the electricity market under study. 2 - An Empirical Investigation of Emissions Reductions under Changing Assessments of Hazard Wayne Fu, Georgia Institute of Technology, 800 West Peachtree Street NW, Atlanta, GA, 30308, United States of America, Wayne.Fu@scheller.gatech.edu, Basak Kalkanci, Ravi Subramanian Governmental organizations such as the CDC provide extensive public information on potential hazards of industrial chemicals. We investigate facility- level emissions reductions of chemicals in relation to changes in their assessments over time. We also examine the effects of important external and internal factors such as competition and operational leanness. 3 - The Role of Real-time Feedback on Conservation and Energy Efficiency Adoption: An Empirical Study Christian Blanco, UCLA Anderson School of Management, Los Angeles, CA, United States of America, christian.noel.blanco@gmail.com, Magali Delmas Non-linear pricing schedules may make it difficult for consumers to know the marginal price they currently pay for energy services. Our results show that consumers that receive real-time information on marginal prices decrease consumption by about 5 to 15%. We also show the relationship between information and residential energy efficiency adoption.

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