2015 Informs Annual Meeting

WC49

INFORMS Philadelphia – 2015

2 - Dynamic Pricing with Bogo Promotion in Revenue Management Sunggyun Park, Doctoral Program, KAIST, 291 Daehak-ro Yuseong, Daejeon, Korea, Republic of, sunggyun@kaist.ac.kr, Kyoung-kuk Kim, Chi Guhn Lee We consider a dynamic pricing problem when a seller sells a single product in a finite horizon. We particularly focus on the widely adopted promotional schemes “buy one get one free” and “50% off” and study the optimal strategic choices of the seller. Analytical results together with numerical experiments are presented to help us obtain managerial insights. Additional numerical results for a generalized model are provided so as to examine the effectiveness of promotional schemes. 3 - Estimation from Competitor Data Möge Tekin, Universitat Pompeu Fabra, Ramon Trias Fargas, 27, Barcelona, Spain, muge.tekin@upf.edu, Kalyan Talluri Competitor price information is available as a data stream in many industries. Also, in the hotel industry some providers reveal competitor occupancy rates. While this information is very closely monitored by hotel managers, it has not been fully exploited by revenue management systems. We exploit this marginal information to answer a question of great interest to pricing managers: How much should I price above (or below) the competitor’s price? 4 - Revenue Bounds for Bundling Strategies under Dependent Valuations Fredrik Odegaard, Ivey Business School, Western University, Digital goods such as radio streaming, television channels or e-journals are frequently bundled in packages of large sizes. Moreover, most of these bundles incorporate goods that have dependent valuations, which makes the associated revenue optimization problem hard to solve analytically. In this paper, we derive tight bounds for the seller’s revenue function and show the existence of an optimal maximin pricing strategy. 1255 Western Road, London, ON, N6G 0N1, Canada, fodegaard@ivey.uwo.ca, Mihai Banciu, Alia Stanciu

4 - Cultural Attitudes Towards Contract Design in Supply Chain Exchanges Dina Ribbink, Assistant Professor, Western University, 1255 Western Rd, London, ON, Canada, dribbink@ivey.ca, Yun Shin Lee, Stephanie Eckerd The purpose of this study is to investigate the impact of national culture on the design and effectiveness of bonus and penalty incentive contracts. We conduct laboratory experiments in Canada, China, and the Republic of Korea, and evaluate buyers’ contract design decisions and suppliers’ responses. WC50 50-Room 106A, CC Non-Profit Operations Management Sponsor: Manufacturing & Service Operations Management Sponsored Session Chair: Sripad Devalkar, Assistant Professor, Indian School of Business, Gachibowli, Hyderabad, 500032, India, sripad_devalkar@isb.edu Co-Chair: Karthik V. Natarajan, Assistant Professor, University of Minnesota, 321 19th Avenue South, 3-150, Minneapolis, MN, United States of America, knataraj@umn.edu 1 - Understanding and Improving Global Health Supply Chains: An Analysis of Global Supply Chain D Ananth Iyer, Susan Bulkeley Butler Chair In Operations Management, Purdue University, Purdue University, West Lafayette, IN, United States of America, aiyer@purdue.edu, Gemma Berenguer We focus on data from USAID which provides all shipments across the supply chain in 2011-2012. We built statistical and mathematical programming models to understand the logic of the flows, explore the impact of changes in mode mix and changes in supply chain structure and explore the impact of lead times, transshipment etc. Our goal is to enable an understanding of the cost and service level impact on the operation of the supply chain. 2 - Effect of Armed Conflicts on Humanitarian Operations Alfonso Pedraza-Martinez, Assistant Professor, Indiana University, 1309 E 10th Street, Bloomington, IN, 47405, United States of America, alpedraz@indiana.edu, Andres Jola-sanchez, Kurt Bretthauer, Rodrigo Britto We study an important but widely neglected topic in humanitarian operations: armed conflicts. Specifically, we analyze the effect of man-made disasters (armed conflicts) on the operational performance of rural hospitals and investigate what is the effect of conflicts on: (i) the efficiency of rural hospitals? (ii) the total factor productivity of rural hospitals? and (iii) patient satisfaction? We use panel data from 163 public rural hospitals in Colombia during the period 2007-2011. 3 - Payment for Results: Signaling Efficiency in Non-profit Operations Milind Sohoni, Associate Professor Of Operations Management And Sr. Associate Dean Of Programs, Indian School of Business, Gachibowli, Indian School of Business, Gachibowli, Hyderabad, Pl, 500032, India, milind_sohoni@isb.edu, Sripad Devalkar We consider the problem of a NPO raising funds for projects. Donors care about the end benefits but are uncertain about the NPO’s efficiency. We compare the performance of traditional fund raising, where donors contribute before implementation, with an emerging form of ‘payment for results’ wherein the NPO implements a project and then seeks contribution. We highlight conditions when the ‘payment for results’ option dominates. Our results suggest important implications for regulators too. 4 - Dynamic Programming to Reduce Environmental Impacts of Food Waste at Campus Dining Services Esma Birisci, Student, University Of Missouri, 246 Engineering Building West, Columbia, MO, 65211, United States of America, esmabirisci@mail.missouri.edu, Ronald McGarvey, Christine Costello This research incorporates environmental impacts of food wastage into a cost- minimizing stochastic inventory model of campus dining service operations. We use Life Cycle Analysis estimates to account for broader environmental costs of wasted food, focusing on how optimal food production and ordering decisions can reduce storage losses and over preparation losses.

WC49 49-Room 105B, CC Incentive and Compensation Schemes in Supply Chains Sponsor: Manufacturing & Service Oper

Mgmt/Supply Chain Sponsored Session

Chair: Sandra Transchel, Kuehne Logisitcs University, Grosser Grasbrook 17, Hamburg, Germany, Sandra.Transchel@the-klu.org 1 - You Get What You Pay For: Ceo Compensation and the Inventory Rhombus

Kristoph Ullrich, Köhne Logistics University - KLU, Grosser Grasbrook 17, Hamburg, 22297, Germany, Kristoph.Ullrich@the-klu.org

This article seeks and finds empirical evidence of a relationship between CEO compensation and inventory investments in multiple direct and indirect ways. I identify the dominant of the competing hypotheses that emerge from OM theory: CEOs whose compensation is more dependent on the stock price follow less risky strategies and invest less in inventories. CEOs whose compensation is more dependent on the stock price volatility follow more risky strategies and have higher inventory investments. 2 - Contract Design in Processing Trade under Information Asymmetry Paolo Letizia, Assistant Professor of Business Analytics, University of Tennessee, 223 Stokley Management Center, 916 Volunteer Boulevard, Knoxville, TN, 37996, United States of America, pletizia@utk.edu, Long Gao Processing companies have repeatedly wrestled on the question whether they should control or delegate the quality of their products to foreign producers. We study this important question when there is a gap of expertise in the production processes between the processing company and its producer. We find that although quality delegation involves a control loss, it allows the producer to leverage on his superior expertise resulting in a flexibility gain. 3 - Salesforce Compensation under Inventory Rationing Sandra Transchel, Kuehne Logisitcs University, Grosser Grasbrook 17, Hamburg, Germany, Sandra.Transchel@the-klu.org, Kristoph Ullrich, Ruud Teunter, Jasper Veldman We study sales quota-based compensation schemes of two sales agents who can exert effort to stochastically increase demand. Both agents satisfy demand from the same inventory, which is ordered by the firm before demand uncertainty is revealed. As actual demand and exerted sales effort are unobservable by the firm, both agents decide on their effort level based on sale quota bonus contract, inventory level, and allocation policy, which are designed by the firm to maximize the expected profit.

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