Informs 2015

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INFORMS Philadelphia – 2015
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2 - Dynamic Pricing with Bogo Promotion in Revenue Management
Sunggyun Park, Doctoral Program, KAIST, 291 Daehak-ro
Yuseong, Daejeon, Korea, Republic of,
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, 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,
1255 Western Road, London, ON, N6G 0N1, Canada,
Mihai Banciu, Alia Stanciu
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.
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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,
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,
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,
, 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,
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.
4 - Cultural Attitudes Towards Contract Design in Supply
Chain Exchanges
Dina Ribbink, Assistant Professor, Western University,
1255 Western Rd, London, ON, Canada, ,
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.
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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,
Co-Chair: Karthik V. Natarajan, Assistant Professor, University of
Minnesota, 321 19th Avenue South, 3-150, Minneapolis, MN,
United States of America,
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,
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, 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, , 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,
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.
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