2015 Informs Annual Meeting

TD48

INFORMS Philadelphia – 2015

TD48 48-Room 105A, CC New Directions at the Interface of Finance, Operations, and Risk Management Sponsor: Manufacturing & Service Oper Mgmt/iFORM Sponsored Session Chair: Gerry Tsoukalas, Assistant Professor, Wharton, 3730 Walnut street, Philadelphia, PA, 19104, United States of America, gtsouk@wharton.upenn.edu Co-Chair: Vlad Babich, Georgetown University, Washington, D.C., Volodymyr.Babich@georgetown.edu 1 - Supply Chain Contract Design under Financial Constraints and Bankruptcy Costs Panos Kouvelis, Professor, Olin Business School, Washington University in St. Louis, St. Louis, MO, United States of America, kouvelis@wustl.edu, Wenhui Zhao We study contract design in a supply chain of two capital constrained firms in need of short-term financing. The failure of loan repayment leads to bankruptcy with fixed and variable default costs. With only variable default costs, buyback contracts remain equivalent to revenue-sharing contracts, which coordinate with working capital adjustments. With fixed default costs, a revenue-sharing contract with working capital coordination might have higher expected profit than the one-firm system. 2 - Network Recovery using Transactional Information John Birge, Professor, University of Chicago Booth School of Firms operate as components of complex networks of physical and financial flows. The structure of these networks is however not easily observed. This talk will discuss methodologies to uncover such hidden structure using inverse optimization techniques. 3 - Does Operational Investment Vary with Capital Structure? Vishal Gaur, Cornell University, 321 Sage Hall, Ithaca, NY, 14850, United States of America, vg77@cornell.edu, Yasin Alan We investigate the relationship between the operational investment of firms and their capital structure choices using data for U.S. manufacturing and retail trade sectors. 4 - Entrepreneurial Finance: Crowdfunding, Venture Capital, and Bank Financing Vlad Babich, Georgetown University, Washington, DC, United States of America, Volodymyr.Babich@georgetown.edu, Gerry Tsoukalas We study the interplay between bank financing, venture capital and crowdfunding, in a multi-stage bargaining game, with double-sided moral hazard. We find that while crowdfunding usually serves a positive role, enabling funding for good projects, and avoiding investments in bad projects, it may also hurt VCs, entrepreneur, and the society. TD49 49-Room 105B, CC Demand Driven Supply Chains Sponsor: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Muge Yayla-Kullu, RPI, 110 8th St, Troy, NY, 12180, United States of America, YAYLAH@rpi.edu 1 - The Effect of Targeted Coupons on Product Quality Assortment and Competition Amit Eynan, Professor, University of Richmond, 1 Gateway Rd, Richmond, VA, 23173, United States of America, aeynan@richmond.edu, Benny Mantin Manufacturers who sell to customers with heterogeneous valuation of quality can segment the market by offering multiple products at different qualities and prices. We investigate the effect of targeted marketing efforts (coupons) on product line assortment of a monopolist as well as under competition. While coupons help the monopolist, in the competitive setting, we find that both firms end up exerting marketing efforts but only one of them is better off whereas the other is worse off. Business, 5807 S Woodlawn Ave, Chicago, IL, 60637, United States of America, john.birge@chicagobooth.edu

2 - Competition and Perceptions of User Reviews Michael Galbreth, Associate Professor Of Management Science, Moore School of Business, University of South Carolina, Columbia, SC, United States of America, galbreth@moore.sc.edu, Pelin Pekgun, Bikram Ghosh We analyze the interaction of user reviews and valuation uncertainty for experience goods, with a specific focus on the potential for negative vs. positive reviews to be weighted differently by consumers. The competitive impact of this unequal weighting is not always intuitive. For example, we show that if a lower quality firm has a large user base, overweighting of negative reviews can lead to higher profits and higher prices in equilibrium than its higher quality competitor. 3 - Analysis of Consumers’ Purchase Timing Decisions Emre Ertan, PhD Candidate, UT Dallas, Sm30 Jindal School of Management, 800W Campbell Dr, Richardson, TX, 75080, United States of America, emre.ertan@utdallas.edu, Kathy Stecke, Ozalp Ozer The consumer purchase timing decision is analyzed by using discounted expected utility theory, where consumers act to maximize their utility over time. The consumer’s sequential decision-making process is formalized under uncertain product availability. An optimal purchase timing policy is identified in a market environment, in which a strategic customer knows the markdown pricing scheme, available inventory level, and remaining time to the end of the selling horizon. 4 - Product Line Design and Capacity Management: The Role of Consumer Behavior Uncertainty Muge Yayla-Kullu, RPI, 110 8th St, Troy, NY, 12180, United States of America, Yaylah@rpi.edu, Jennifer Ryan, Jayashankar Swaminathan We study the effects of uncertainty in consumer spending due to economic volatility on the product line decisions of a firm with limited resources. We consider a firm that offers products with differing qualities, unit production costs, and resource consumption rates. Making capacity allocation decisions in the face of such an uncertainty is challenging, demanding careful consideration of product variety and available resources. 5 - A Manufacturer’s Outlet Decision: The Impact of Quality, Innovation and Market Awareness Jennifer Ryan, RPI, ISE, CII, Troy, NY, 12180, United States of America, ryanj6@rpi.edu, Daewon Sun We consider a manufacturer of a luxury good who must determine whether to sell products only through a manufacturer-owned retail store, or to also sell products through the factory outlet store. We study how this decision depends on the relative qualities of the products offered on the two channels, as well as the manufacturer’s ability to innovate and introduce new product lines. In addition, our multi-period model captures the impact of market share on the manufacturer’s brand awareness. TD50 50-Room 106A, CC Supply Network Management: Collaboration and Competition Sponsor: Manufacturing & Service Operations Management Sponsored Session

Chair: Hyoduk Shin, UC-San Diego, San Diego, CA, United States of America, hshin@rady.ucsd.edu 1 - Optimal Procurement in Assembly Supply Chains: Contracting Timing and Supplier Mergers

Bin Hu, Assistant Professor, UNC Kenan-Flagler Business School, CB#3490 McColl Bldg, University of North Carolina, Chapel Hill, NC, 27519, United States of America, Bin_Hu@kenan- flagler.unc.edu, Anyan Qi OEMs often procure components from several suppliers to assemble into products. Such an OEM needs proportional component quantities, calling for a coordinated procurement mechanism. We propose the use of two-part tariff contracts for coordinated procurement. We further show that simultaneous and sequential contracting are equivalent. Finally, we investigate the impact of a supplier merger in an assembly supply chain.

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