2015 Informs Annual Meeting

WD47

INFORMS Philadelphia – 2015

WD48 48-Room 105A, CC Revenue Management Pricing II Contributed Session Chair: John Wilson, Ivey School of Business, 1255 Western Road, London, ON, N6G 0N1, Canada, jwilson@ivey.ca 1 - Optimal Subscription Pricing for Free Delivery Services Chinmoy Mohapatra, PhD Candidate, University of Texas at Austin, 3500 Greystone Drive, Apt. 126, Austin, TX, 78731, United States of America, chinmoym@utexas.edu, Anant Balakrishnan, Shankar Sundaresan We study the subscription pricing problem of a retailer that offers its consumers two delivery choices: a pay-per-delivery option and a subscription option with free delivery. The retailer balances the “loss” incurred in covering the shipping costs of subscribers against the increase in revenue from the “lift” in their order quantity. Considering a model with a general utility framework, heterogeneous consumers, and an outside option, we characterize the retailer’s optimal subscription price. 2 - Budget Constrained Markdown Optimization Emrah Zarifoglu, Team Leader - Optimization And Modeling, IBM, 1001 Hillsdale Blvd. Ste 400, Foster City, CA, United States of America, emrah.zarifoglu@utexas.edu, Xiao Chun Li, Jun Lei Chen Markdown is a schedule of known price reductions taken over short time with the purpose of managing a product out the assortment gracefully and cost- effectively. Markdown budget is an important constraint when retailers run a markdown recommendation for a plan. It is crucial to limit total markdown dollars under budget. We provide a method to ensure markdown dollar to be limited to markdown budget and avoid the performance issue when considering the total budget across all store-products level. 3 - Dynamic Nonlinear Pricing of Inventories Over Finite Sales Horizons Yan Liu, University of Science and Technology of China, No.96, Jin Zhai Road Baohe District, Hefei, China, terenceliuyan@gmail.com, Guillermo Gallego, Michael Li We present three dynamic pricing models in a setting where customers can be incentivized to purchase multiple units. The dynamic linear pricing (DLP)model charges a uniform price that depends on the time-to-go and the remaining capacity. The dynamic package pricing (DPP) model allows complete freedom in pricing different bundle sizes. We also study dynamic block pricing (DBP) as an intermediate scheme where prices are linear within each block. 4 - Dynamic Pricing for a Single Perishable Product Based on Customer Inertia Yusheng Hu, Student, School of Management and Economics,Beijing Institute of Technology, No. 5 South Zhong Guan Cun Street, Beijing, 100081, China, huyusheng1981@163.com, Jinlin Li This paper investigates a dynamic pricing problem for a single perishable product in the presence of customer inertia. Dynamic pricing model about customer inertia is established using the dynamic programming method, and structural properties of the optimal price are given. The results show that customer inertia produces negative effect on the optimal price, which is monotonically decreasing in inertia depth and inertia breadth. 5 - Optimising Name-your-own-price Auctions Over Different Channels and Number of Bids John Wilson, Ivey School of Business, 1255 Western Road, London, ON, N6G 0N1, Canada, jwilson@ivey.ca Optimality results for designing Name-Your-Own-Price Auctions with other distribution channels will be presented. For the case of just a Name-Your-Own- Price Auction, the optimality results regarding allowing one or more bids will be presented.

3 - The Performance Benefits of Not Working Bradley Staats, Associate Professor, UNC-Chapel Hill, NC, United States of America, Bradley_Staats@kenan-flagler.unc.edu Using lab and field experiments we examine how performance may be improved by doing less and thinking more. 4 - The Persistence of Customer Incompatibility: Evidence from a Retail Bank Acquisition Ryan Buell, Harvard Business School, Morgan Hall 429, Boston, MA, 02163, United States of America, rbuell@hbs.edu, Dennis Campbell When a firm acquires a customer whose needs and preferences are misaligned with its operating system, will the customer’s preferences conform over time? Will the customer defect? Or, will the misalignment persist? We leverage a natural experiment created when one nationwide retail bank acquired another to answer these questions. WD47 47-Room 104B, CC Strategic Planning for the Closed Loop Supply Chain Sponsor: Manufacturing & Service Oper Mgmt/Sustainable Operations Sponsored Session Chair: Daniel Steeneck, Post Doctoral Associate, MIT Center for Transportation and Logistics, 1 Amherst St., E40-211, Cambridge, MA, Cerag Pince, Kuehne Logistics University, Grosser Grasbrook 17, Hamburg, Germany, Cerag.Pince@the-klu.org, Beril Toktay, Mark Ferguson Consumer returns constitute a substantial fraction of sales in the consumer electronics industry and often cannot be re-sold as new due to litigation concerns. Therefore, identifying the best joint pricing and disposition strategy is a challenging but important decision for consumer electronics OEMs. This paper investigates how an OEM should price new and refurbished products while allocating consumer returns between remarketing and warranty coverage options over the product’s short life cycle. 2 - Optimal Product Design in a Remanufacturing Setting Serkan M. Akturk, PhD Candidate, Texas A&M University, 4217 TAMU Wehner 320 M, College Station, TX, United States of America, makturk@mays.tamu.edu, James Abbey, Neil Geismar, V. Daniel R. Guide, Jr. This study analytically investigates how remanufacturing firms should choose among varying design philosophies ranging from integral to modular to part- based designs. Firms believe that increasing the level of remanufacturability would also increase the profitability by lowering remanufacturing costs. However, several factors such as industry clockspeed and time-to-market complicate this decision. 3 - The Effect of Channel Structure on End-of-Life Product Collection Strategies Elizabeth J. Durango-Cohen, Associate Professor, Illinois Institute of Technology, 10 W. 35th Street, Chicao, IL, 60616, United States of America, durango-cohen@iit.edu, Chia-hang Li In this talk, we address the coordination issue of deciding on the proper reverse channel strategy to collect End-of-Life products in a three-echelon closed-loop supply chain, under the presence of a strategic recycler. We find that the manufacturer is always better-off by outsourcing product collection activities either to the retailer or the recycler. We discuss the impact of a strategic recycler, whether a price taker or price maker, on equilibrium prices, profits, and collection rates. 4 - End-of-life Option and Product Design Daniel Steeneck, Post Doctoral Associate, MIT Center for Transportation and Logistics, 1 Amherst St., E40-211, Cambridge, MA, 02142, United States of America, steeneck@mit.edu, Subhash C. Sarin The characteristics of a product and its parts determine its optimal End-of-Life (EOL) option. However, a product’s design plays a large role in determining the characteristics of a product. Insights relating product design to optimal EOL option are presented. 02142, United States of America, steeneck@mit.edu 1 - To Remarket Now or Save for Warranty Claims

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