2015 Informs Annual Meeting

MD49

INFORMS Philadelphia – 2015

MD47 47-Room 104B, CC Sustainability and Transportation Sponsor: Manufacturing & Service Oper Mgmt/Sustainable Operations Sponsored Session Chair: Ruben Lobel, Operations and Information Management Department at The Wharton School of the University of Pennsylvania, Jon M. Huntsman Hall 3730 Walnut Street, Office 568, Philadelphia, PA, 19104, United States of America, rlobel@wharton.upenn.edu 1 - Compete vs. Cooperate? A Strategic Game Behind the EV Standards War Ni Fang, HEC Paris, 1, Rue de la Liberation, HEC Paris, Jouy en Josas, DI, 78351, France, ni.fang@hec.edu, Marco Ceccagnoli In the light of the standards war currently staged in electric vehicle (EV) industry, this paper examines the strategic choice facing the two EV manufacturers as to compete vs. cooperate for the development of an extensive charging infrastructure, a key complementary asset mitigating EV range anxiety. In doing so, this paper demonstrates EV manufacturers’ incentives towards standardization and shows how standardization affects EV diffusion rate and firm’s performance. 2 - Food, Energy and Environment Trilemma: Land use Configuration for Biofuel Industry Development We address the negative side effects of the rapid development of the biofuel industry, which has caused extensive competition among food, energy, and the environment in agricultural land use. Taking into account interactions among multiple stake-holders (e.g., farmers, bioenergy firms, food industry, government), we develop policy guidelines for coordinating subsidy and mandates to better achieve sustainable development of this emerging bio- economy. 3 - Socially Responsible Business Models for Off-grid Energy Access Serguei Netessine, Professor, INSEAD, 1 Ayer Rajah Avenue, Singapore, 138676, Singapore, Serguei.Netessine@insead.edu, Bhavani Shanker Uppari, Ioana Popescu One fifth of the humankind does not have access to electricity. They are mainly poor and rely on unhealthy solid fuels (kerosene etc.) for lighting. Even though cheaper rechargeable lighting technologies are available, their adoption is low and some consumers still use kerosene. We propose a model which explains this preference for kerosene and explore various business models which could alter this preference. 4 - Technology Sharing in Two-sided Markets Ozge Yapar, Doctoral Candidate, University of Pennsylvania, Michael Lim, University of Illinois, 1206 S. 6th Street, Champaign, IL, 61822, United States of America, mlim@illinois.edu, Yanfeng Ouyang, Xin Wang

2 - Systematic Risk and Mass Layoffs in the U.S. Manufacturing Nikolay Osadchiy, Emory University, 1300 Clifton Rd NE, Atlanta, GA, 30322, United States of America, nikolay.osadchiy@emory.edu, Suresh Dasari, Peeyush Taoiri, Sridhar Seshadri We study the role of systematic risk in jobs relocation decisions of manufacturers. Using the mass layoffs data in the U.S. manufacturing sector for the period from 2002 to 2010, we explore the view voiced by a number of manufacturers that in addition to cheap labor, systematic risk is also an important input in their production decisions. 3 - Risk or Margin: The Role of Trade Credit in Competition Heikki Peura, London Business School, Regent’s Park, London, United Kingdom, hpeura@london.edu, S. Alex Yang, Guoming Lai We analyze horizontal competition with and without trade credit under the classic Bertrand framework. We find that when the competing firms are financially constrained, trade credit allows them to soften price competition. We further investigate the relationship between firms’ financial strength and their physical production capacity, finding that with trade credit, financial constraints are a partial substitute for the role that physical capacity plays in price competition. 4 - Mental Cost Ratios and the Beer Game In this study we investigate the underlying behavior of beer-game players through a series of experiments. We argue that players make decisions based, partly, on a dynamic mental cost-ratio that fluctuates following multiple factors. We use a structural estimation model to quantify the mental weighing of underage and overage costs, and discuss several factors driving the decision making. MD49 49-Room 105B, CC Supply Chain Operations Sponsor: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Alp Muharremoglu, Associate Professor, University of Texas at Dallas, 800 W Campbell Rd, Richardson, TX, United States of America, alp@utdallas.edu 1 - Using Retailer Order Commitments to Improve Supply Chain Performance Nagesh Gavirneni, Cornell University, Ithaca, NY, United States of America, sg337@cornell.edu, Nagesh Gavirneni We establish that retailer order commitment strategies improve the efficiency of decentralized distribution supply chains whenever the supplier’s cost is at lest 29.3% of the total supply chain cost. The effectiveness increases as the supplier’s share of the total supply chain cost increases. We establish the robustness of these results for settings with non-normal demand distributions, backlogging at the supplier, and positive lead times between the supplier and the retailers. 2 - Can a Zero-margin Demand Stream Increase Profits? Shaokuan Chen, The University of Texas at Dallas, 800 W. Campbell Road,, Richardson, TX, 75080, United States of America, shaokuan.chen@utdallas.edu, Ganesh Janakiraman, Alp Muharremoglu We consider a firm selling a non-perishable product in its primary market over time with uncertain demand. Suppose a new opportunity arises from a secondary market where the firm’s product can only be sold at a zero-margin. Moreover, the firm is required to give priority to the demand from the secondary market. We explore the following question: Can such a zero-margin opportunity increase the firm’s profit, and if so, when? 3 - Mitigating Supply Chain Disruptive Risks: A Two-stage Robust Optimization Approach Peter Yun Zhang, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Building E40-261, Cambridge, MA, 02139, United States of America, pyzhang@mit.edu, Nikolaos Trichakis, David Simchi-levi We present a model that captures two sets of decisions a supply chain risk manager faces: the placement of inventory in preparation for supply disruption and demand uncertainty, and the recourse decisions that coordinate capacity and inventory allocation after the uncertain events unfold. We take a worst-case perspective and analyze the problem via its Affinely Adjustable Robust Counterpart. Maximiliano Udenio, Technical University of Eindhoven, Eindhoven, Netherlands, M.Udenio@tue.nl, Vishal Gaur, Jan Fransoo

Wharton School, Operations and Information Mgmt., Philadelphia, PA, 19104, United States of America, yapar@wharton.upenn.edu, Lorin Hitt, Ruben Lobel

This paper investigates the drivers behind Tesla’s decision to make its patents freely available to other electric car manufacturers. The two sides of this market, car owners and potential charging stations, rely on each other to increase the value of their investment. We show under what conditions subsidizing the competitors can be profitable. By sharing technology, Tesla may be able to improve the charging station network and increase its own profit from car sales.

MD48 48-Room 105A, CC

Operations/Corporate Finance Interface Sponsor: Manufacturing & Service Oper Mgmt/iFORM Sponsored Session Chair: Vishal Gaur, Cornell University, 321 Sage Hall, Ithaca, NY, 14850, United States of America, vg77@cornell.edu 1 - How Do Information Spillover and Debt Financing Affect Companies’ Innovation Decisions? Jie Ning, Assistant Professor, Case Western Reserve University, 11119 Bellflower Rd, Cleveland, OH, 44106, United States of America, jie.ning@case.edu, Volodymyr Babich Information spillover alone leads to inefficient innovation equilibrium by inducing companies to free ride. Debt financing alone also leads to inefficient equilibrium by inducing companies to take excessive risks. This paper examines the interaction of these two economic forces and shows that the presence of both leads to either under-investment, over-investment, or social optimality.

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