Informs 2015

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INFORMS Philadelphia – 2015
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3 - Adaptive Robust Optimization of Surgery and Downstream
Capacity Planning
Saba Neyshabouri, PhD Student, George Mason University,
SEOR Department, Engr Bldg, Rm 2100, MS, Fairfax, VA, 22030,
United States of America, , Bjorn Berg
We propose a novel robust optimization formulation to address the uncertainty in
surgery duration and length-of-stay (LOS) in the downstream unit. The structure
of the problem is analyzed in order to adapt a column-and-constraint generation
method to find the optimal solution to the formulation. The methodology
presented can be used in other important applications such as resource-
constrained project scheduling under activity duration uncertainty and inventory
management.
4 - Multi-class, Multi-resource Advance Scheduling with No-shows,
Cancellations and Overbooking
Mahshid Parizi, University of Washington, Industrial & Systems
Engineering, University of Washington Box 352650, Seattle,
United States of America, , Archis Ghate
We study a scheduling problem where arriving stochastic demand of
heterogeneous job-types is booked into the booking horizon or is rejected. The
effect of cancellations, no shows and overbooking is included. Scheduling
decisions must respect multiple resource constraints. We formulate an MDP
model and provide an approximate dynamic programming algorithm rooted in
Lagrangian relaxation, value function approximation and constraint generation.
The resulting policies are compared with a myopic one.
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43-Room 103A, CC
Innovative Pricing Strategies
Sponsor: Revenue Management and Pricing
Sponsored Session
Chair: Pnina Feldman, UC Berkeley Haas School of Business, 2220
Piedmont Ave, Berkeley, CA, 94720, United States of America,
1 - Unbundling of Ancillary Service: How Does Price Discrimination
of Main Service Matter?
Yao Cui, Cornell University, 401N Sage Hall, Ithaca, United States
of America, , Izak Duenyas, Ozge Sahin
We consider a setting where the firm sells a main service (e.g., air travel) and an
ancillary service (e.g., baggage delivery) to multiple consumer segments (e.g.,
business travelers and leisure travelers). We study how the firm’s ability to charge
discriminatory main service prices affects its decision of whether to unbundle the
ancillary service from the main service and charge separate prices.
2 - Dynamic Pricing in the Presence of Social Learning and
Strategic Consumers
Yiangos Papanastasiou, Haas School of Business, UC Berkeley,
Berkeley, CA, 94720, United States of America,
Nicos Savva
When a product of unknown quality is first introduced, consumers may choose to
strategically delay their purchasing decisions in order to learn from the reviews of
their peers (social learning). This paper investigates how the presence of social
learning affects the strategic interaction between a dynamic-pricing monopolist
and a forward-looking consumer population.
3 - Innovative Dynamic Pricing: The Potential Benefits of
Early-purchase Reward Programs
Yossi Aviv, Professor, Washington University, 1 Brookings Drive,
St. Louis, MO, 63130, United States of America, ,
Mike Wei
The management science literature has studied on the implications of strategic
consumer behavior on the effectiveness of dynamic pricing strategies. Possible
ways to mitigate the adverse effect of strategic consumer behavior include price
commitment, inter-temporal price matching, and capacity rationing. In this work,
we propose a scientific model to theoretically examine the optimal structure and
effectiveness of an early-purchase reward program as a mechanism for mitigating
strategic behavior.
4 - The Operational Advantages of Threshold Discounting Offers
Simone Marinesi, Wharton, 562 Jon M. Huntsman Hall, 3730
Walnut St, Philadelphia, PA, 19104, United States of America,
Inspired by Groupon, this study examines how Threshold-Discounting
strategies–the idea to offer a discounted service to customers conditional on
enough customers subscribing to the offer–can significantly boost operational
performance and profit by improving capacity utilization. However, when offered
through powerful intermediaries, such offers can be much less effective and even
harmful. Surprisingly, in this context, we show that customer strategic behavior is
beneficial to the firm.
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44-Room 103B, CC
Contemporary Challenges in Pricing and Revenue
Management: Repetitive Purchases and Loss
Aversion
Sponsor: Revenue Management and Pricing
Sponsored Session
Chair: Necati Tereyagoglu, Assistant Professor of Operations
Management, Scheller College of Business, Georgia Institute of
Technology, 800 W Peachtree St NW, Suite 4424, Atlanta, GA, 30308,
United States of America,
1 - Optimal Pricing of Access and Secondary Goods with Repeat
Purchases: Evidence from Online Grocery
Ricard Gil, Associate Professor, ,
Evsen Korkmaz, Ozge Sahin
We investigate optimal pricing strategies for an online grocery retailer who
derives its profits from delivery fees and grocery sales. We derive testable
theoretical implications that we take to data using a unique dataset detailing
transaction information from an online grocery retailer in a Western European
country. We find that firms may increase profits by implementing alternative and
simpler pricing strategies that combine second and third degree price
discrimination schemes.
2 - Loss Aversion and the Uniform Pricing Puzzle for Vertically
Differentiated Products
Javad Nasiry, Assistant Professor, Hong Kong University of
Science and Technology, ISOM, LSK Building, HKUST, Hong
Kong, Hong Kong - PRC, , Pascal Courty
The uniform pricing puzzle states that a monopolist sells high and low quality
products at the same price despite the fact that quality is perfectly observable and
that there are no significant costs of adjusting prices. We resolve the puzzle by
accounting for consumer loss aversion in monetary and consumption utilities and
by assuming that the reference point is endogenously set as part of a “personal
equilibrium” and includes only past purchases of products of the same quality.
3 - Service Pricing with Loss Averse Customers
Liu Yang, Tsinghua University, School of Economics and
Management, Tsinghua university, Beijing, 100084, China,
, Pengfei Guo, Yulan Wang
We consider a service system in which customers are loss averse towards both
price and delay attributes. We first study customers’ equilibrium queueing
strategies. We find that, in contrast to the traditional case in which loss aversion is
not considered, there could exist three equilibrium strategies,. We then study the
optimal pricing problem for a monopoly server. We show that loss aversion
polarizes queues, making long queues even longer and short queues even shorter.
4 - Multi-Attribute Loss Aversion and Reference Dependence:
Evidence from Performing Arts Industry
Necati Tereyagoglu, Assistant Professor of Operations
Management, Scheller College of Business, Georgia Institute of
Technology, 800 W Peachtree St. NW, Suite 4424,
Atlanta, GA, 30308, United States of America,
, Peter Fader,
Senthil Veeraraghavan
We hypothesize that not only the price but also the observed sales for a seating
area determines the utility of a customer from buying a ticket for a show in this
industry. We test the reference effects for both prices and sales using customer
level transaction data from an orchestra in the US, and show that patron decisions
are driven by the position of the seating alternatives relative to price and sales
expectations. We find that the revenue effects of referencing are significant.
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45-Room 103C, CC
Sustainability II
Contributed Session
Chair: Xu Chang-yan, Shanghai Maritime University, 1550 Haigang
Avenue, Shanghai, 201306, China,
1 - Including Regeneration Possibilities to Increase Water Reuse in
Scheduling Multipurpose Batch Plants
Renzo Akkerman, Technische Universität Mönchen, TUM School
of Management, Arcisstr 21, Mönchen, 80333, Germany,
Pulluru Sai Jishna
Scheduling of multipurpose batch process plants has recently started integrating
water reuse objectives, also including water regeneration processes. Including
regeneration possibilities significantly alters the flexibility of schedules that are
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