Informs 2015

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INFORMS Philadelphia – 2015
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51-Room 106B, CC
Procurement Mechanisms
Sponsor: Manufacturing & Service Operations Management
Sponsored Session
Chair: Tharanga Rajapakshe, Assistant professor, University of Florida,
W. University Ave, Gainesville, FL, 32611, United States of America,
1 - Distressed Selling by Farmers: Model, Analysis, and Use
in Policy-Making
Shivam Gupta, PhD Candidate, UT Dallas, NJ School of
Management, 800 W. Campbell Rd., Richardson, TX, 75080,
United States of America,
Ashutosh Sarkar, Ganesh Janakiraman, Milind Dawande
The surprising practice of distressed selling, where farmers sell produce to outside
agents at prices much lower than the government’s guaranteed price, is common
in developing countries. We build a tractable stochastic DP model that captures
the ground realities – limited and uncertain procurement capacity, high holding
costs, and lack of affordable credit – that lead to distressed sales. Using real
procurement data, we establish the accuracy of our model and develop useful
policy suggestions.
2 - Coordinating Procurement Decisions in Multi-division Firms
Fang Fang, Ph. D. Candidate, University of Miami, 5250
University Drive, Coral Gables, FL, 33124, United States of
America, , Hari Natarajan
Central procurement organizations (CPO) of large firms must coordinate firm-
wide procurement to leverage volume discounts from suppliers. Facing such a
procurement coordination problem, we examine how a CPO can design internal
prices to maximize firm-wide cost savings. Our analysis of commonly-used
internal pricing rules shows interesting impacts on vendor selection, divisional
participation, and gain allocation.
3 - Does Quality Knowledge Spillover at Shared Suppliers? –
An Empirical Investigation
Suresh Muthulingam, Assistant Professor Of Supply Chain
Management, SMEAL College of Business, The Pennsylvania
State University, 460 Business Building, State College, PA, 16802,
United States of America, , Anupam Agrawal
We study the spillover of quality knowledge across supply chains. We observe the
quality performance of 191 suppliers who use the same facilities to manufacture
similar products for two distinct businesses. We find that quality knowledge spills
over under three conditions: (i) When quality efforts focus on organizational
members; (ii) When quality efforts focus on output activities of suppliers; and (iii)
When quality knowledge is developed at suppliers with low complexity.
4 - Contracting Between a Blood Bank and Hospitals
Anand Paul, University of Florida, 351 Stuzin Hall,
Gainesville, FL, United States of America, ,
Tharanga Rajapakshe
The supply of blood at a regional blood bank (RBB) is uncertain and often
insufficient to satisfy the total demand for it. The RBB typically does not observe
the demand at each hospital before determining the allocation policy. Inefficient
allocation leads to shortages at hospitals which necessitates reallocation of blood
and significant blood outdating cost. We make an analytical study of socially
optimal contracting decisions of an RBB serving multiple hospitals.
TB52
52-Room 107A, CC
Marketing and Optimal Control
Sponsor: Marketing Science
Sponsored Session
Chair: Olivier Rubel, UC Davis, Graduate School of Management, One
Shields Avenue, Davis, United States of America,
1 - Optimal Learning to Select the Best Alternative
Tony Ke, Assistant Professor, Marketing Department, MIT Sloan
School of Management, 100 Main Street, E62-535, Cambridge,
MA, 02142, United States of America, ,
Miguel Villas-boas
A decision maker is deciding among several alternatives with uncertain payoffs
and an outside option with known payoff. Before making a choice, he can
purchase informative signals on each alternative. We solve for the decision
maker’s optimal learning as well as stopping problem, and discuss the
implications.
2 - Automatic Feedback Control for Shunt Drainage in
Hydrocephalus Patients
Kalyan Raman, Professor, Northwestern University,
Medill School, Evanston, IL, United States of America,
Vijay Viswanathan
Excessive intracranial pressure (ICP) resulting from insufficient drainage of
cerebrospinal fluid (CSF) leads to a neurological disorder called hydrocephalus,
which is treated by implanting shunts to reduce ICP by draining excess CSF. We
use non-linear control theory to develop a mathematical algorithm for a regulator
to achieve shunt action that is significantly more sophisticated than that of a
switch.
3 - Multiattribute Pricing
Thomas Weber, Associate Professor, EPFL, CDM-ODY 3.01,
Station 5, Lausanne, VD, 1015, Switzerland,
We provide a technique for constructing second-best multiattribute screening
contracts in a general setting with one-dimensional types based on necessary
optimality conditions. Our approach allows for type-dependent participation
constraints and arbitrary risk profiles. As an example we discuss optimal
insurance contracts.
4 - Dynamic Incentives in Sales Force Compensation
Olivier Rubel, UC Davis, Graduate School of Management,
One Shields Avenue, Davis, CA, United States of America,
Ashutosh Prasad
We propose dynamic principal-agent model to investigate how to incentivize sales
people when current selling efforts and carryover sales drive present sales. We
show that the carryover effect increases not only expected sales, but also sales
uncertainty. We then find that the manager incentivizes the high risk-aversion
salesperson with a concave compensation and the low risk-aversion salesperson
with a convex compensation.
TB53
53-Room 107B, CC
Behavioral Issues in the OM / Marketing Interface
Sponsor: Behavioral Operations Management
Sponsored Session
Chair: Ozalp Ozer, The University of Texas at Dallas, 800 West Campbell
Road, Richardson, TX, United States of America,
Co-Chair: Upender Subramanian, United States of America,
1 - Pricing Cause Marketing Products in the Presence of
Social Comparison
Paola Mallucci, Assistant Professor of Marketing, University of
Wisconsin at Madison, 4261 Grainger Hall, 975 University Ave,
Madison, WI, 53706, United States of America,
, Tony Haitao Cui, George John
The broad takeaway from the literature on cause marketing campaigns, where
firms donate to charities with purchase, is that they generally work well, because
of ``warm glow’’. We conjecture that far from creating only positive feelings, such
firm donations can create discomfort by encouraging social comparison. We find
that firms can find it profitable to exploit such discomfort even if it decreases
consumers utility. Results apply in both monopoly and competition.
2 - Pricing and Quality Perception: Theory and Experiment
Karen Zheng, MIT, 77 Massachusetts Avenue, Cambridge, MA,
02139, United States of America, Rim Hariss,
Georgia Perakis, Wichinpong Sinchaisri
We study how a constant pricing strategy versus a markdown strategy may
induce different perceptions of quality among consumers, and how a firm should
take these quality perceptions into account when optimizing its pricing policy for
competitive products. We empirically elicit the relationship between consumers’
perceived quality and prices under either pricing strategy, and incorporate these
relationships into our consumer model to analyze the firm’s optimal pricing
policy.
3 - Conflict of Interest and Market Structure in Multiplayer Games
Sung Ham, Assistant Professor of Marketing, George Washington
University, 2201 G St. NW, Washington, DC, 20052, United States
of America, , Jiabin Wu, Noah Lim
When a firm serves customers who compete with one another, a conflict of
interest may arise. We develop a multi-player game where firms serve competing
customers, and examine how the market structure faced by the firms impacts the
extent to which conflicts of interest affect behavior. We test our theory using an
incentive-aligned experiment and find that the decisions are consistent with the
model predictions.
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