2015 Informs Annual Meeting

SB49

INFORMS Philadelphia – 2015

2 - Increasing the Quality of Agricultural Produce in Developing Countries Andre Calmon, Assistant Professor, INSEAD, Boulevard de

4 - Supply Chain Disruptions: Evidence from the Great East Japan Earthquake Alireza Tahbaz-Salehi, Columbia Business School, 3022 Broadway, Uris Hall 418, New York, NY, 10023, United States of America, alirezat@columbia.edu, Vasco Carvalho, Makoto Nirei, Yukiko Saito This paper examines whether propagation of idiosyncratic, firm-level shocks through input-output linkages can lead to sizable fluctuations at the aggregate level. Using a large-scale dataset on supply chain linkages among Japanese firms together with information on firm-level exposures to a large, but localized, natural-disaster (the Great East Japan Earthquake in 2011) we quantify the earthquake’s impact on firms that were (directly or indirectly) linked to affected firms. SB50 50-Room 106A, CC Designing Dynamic Markets Sponsor: Manufacturing & Service Operations Management Sponsored Session Chair: Kostas Bimpikis, Stanford GSB, 655 Knight Way, Stanford, CA, Daniela Saban, Stanford University, 655 Knight Way, Stanford, CA, United States of America, dsaban@stanford.edu, Gabriel Weintraub We study the problem of a procurement agency using an auction to construct an assortment of differentiated products, to satisfy the demand from heterogeneous customers. This setting arises in “framework agreements” (FAs), commonly used in public procurement. Using mechanism design and auction theory, we propose recommendations to improve the design of FAs. We apply our results to the FAs run by the Chilean government to buy US$2 billion worth of goods per year. 2 - Mean Field Equilibria in Competitive Exploration Krishnamurthy Iyer, Assistant Professor, School of Operations Research and Information Engineering, Cornell University, 225 Rhodes Hall, Ithaca, NY, 14853, United States of America, kriyer@cornell.edu, Pu Yang, Peter Frazier We study a dynamic setting where multiple agents each explore a set of locations. Each location receives stochastic rewards over time, which is shared among all agents at that location. Based on the location’s reward level and the number of other agents at that location, each agent decides whether to stay or switch to a new location. We study the equilibrium behavior as the number of agents and locations increase proportionally, and investigate the effect of information sharing. 3 - Designing Dynamic Contests Shayan Ehsani, Stanford University, 450 Serra Mall, Stanford, CA, 94305, United States of America, shayane@stanford.edu, Mohamed Mostagir, Kostas Bimpikis Tournaments are best suited for projects that feature a high degree of uncertainty. Information about the status of competition leads to an interesting tradeoff: participants learn about the underlying state from their competitors’ progress but on the other hand their incentive to exert effort may weaken if they are lagging behind. We characterize the design that maximizes the (discounted) payoff for the principal and discuss its implications. 4 - Dynamic Mechanism Design with Budget Constrained Buyers under Non-commitment Santiago Balseiro, Assistant Professor, Duke University, 100 Fuqua Drive, Durham, NC, 27708, United States of America, srb43@duke.edu, Omar Besbes, Gabriel Weintraub We study the dynamic mechanism design problem of a firm repeatedly selling items to budget-constrained buyers when the seller has no commitment power. We argue that this problem is generally intractable. Thus motivated we introduce a fluid model that allows for a tractable characterization of the optimal mechanism. We leverage our characterization to provide insights into the dynamic structure of the optimal mechanism and show that the proposed mechanism is a good approximation in large markets. 94305, United States of America, kostasb@stanford.edu 1 - Auctions for Assortments of Differentiated Products: Design and Applications

Constance, Fontainebleau, 77300, France, andre.calmon@insead.edu, Sameer Hasija

We introduce and analyze a model to capture the interaction between farmers and retailers in agricultural supply chains that are common in the developing world. Namely, we discuss the problem of a retailer that sources perishable goods from small farmers. The quality of a crop depends on the effort that the farmer exerts and this effort is non-contractable. This problem emerged from a collaboration with a large supermarket chain that has operations in Asia. 3 - Cooperative Approaches to Managing Supplier Quality: Joint Auditing and Information Sharing Xin Fang, Assistant Professor, Singapore Management University, 50 Stamford Road, #05-01, Singapore, 178899, Singapore, xfang@smu.edu.sg, Soo-Haeng Cho Product safety incidents in recent years have compelled manufacturers to rethink approaches to manage product quality of their suppliers. We investigate two cooperative approaches: auditing common suppliers jointly (“joint auditing”) and sharing independently collected information with other manufacturers (“information sharing”). Our analysis reveals that, while competing manufacturers may voluntarily cooperate with each other, such cooperation does not necessarily improve product safety. 4 - Managing a Responsible Supply Chain under Threat of Public Disclosure Saed Alizamir, Assistant Professor, Yale University, 165 Whitney Ave, New Haven, CT, 06511, United States of America, saed.alizamir@yale.edu, Sang Kim We analyze a game-theoretic model in which a downstream supply chain member (“buyer”) is penalized disproportionately due to a compliance violation by an upstream member (“supplier”). Buyer’s ability to audit the supplier is limited, and she faces a risk of being publicly blamed after the supplier’s violation is caught by a third party. Supplier exerts effort to enhance compliance in each period, but risks having his relationship terminated due to a stochastic compliance outcome. SB49 49-Room 105B, CC Understanding and Managing Risk in Extended Supply Chains Sponsor: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Robert Swinney, Associate Professor, Duke University, 100 Fuqua Dr, Durham, NC, 27708, United States of America, robert.swinney@duke.edu 1 - Disruption Cascades and Risk Mitigation in Supply Chains Shyam Mohan, London Business School, London, NW14SA, United Kingdom, smohan@london.edu, Nitin Bakshi Disasters such as the Tohuku earthquake in Japan and Thai floods in 2011 serve as a reminder about the extent to which a supply chain is vulnerable to disruptions. The resulting losses arise not only through direct damage but also from disruptions to suppliers belonging to adjacent tiers. As per a recent study, nearly 40% of the disruptions originate in tier 2 and beyond. In this paper, we study the relationship between network structure and disruption cascades in supply chain networks. 2 - Contracting for Shared Value: Efficiencies from Endogenous Process Yield We focus on agricultural value chains where farmers have an opportunity to create value through the adoption of a new management practice, but the economic benefit is either too small for the farmers or accrues primarily to other parties in the supply chain. In a setting with uncertain and endogenous process yield, we study two components of supply chain design – namely contracts and sourcing channels – as possible mechanisms for creating shared value in decentralized value chains. 3 - Risky Suppliers or Risky Supply Chains? Yixin Iris Wang, Ross School of Business, University of Michigan, 701 Tappan Street R3410, Ann Arbor, MI, 48109, United States of America, iriswang@umich.edu, Ravi Anupindi, Jun Li The goal of this research is to assess interdependency of risks in supply network and to understand the process of risk aggregation using firm-level supplier relationship data. We concentrate on the impact of tier-2 overlapping. Our research aims to help firms manage risks more efficiently and acknowledge sub- tier importance. Joann De Zegher, PhD Candidate, Stanford University, 473 Via Ortega, Stanford, CA, United States of America, jfdezegher@stanford.edu, Dan Iancu, Hau Lee

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