2016 INFORMS Annual Meeting Program

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INFORMS Nashville – 2016
312
TC30
202B-MCC
Supply Chain Channel Management
Sponsored: Manufacturing & Service Oper Mgmt
Sponsored Session
Chair: Guoming Lai, University of Texas at Austin, United States,
Co-Chair: Abhishek Roy, UT Austin, UT Austin, Austin, TX, 78712,
United States,
1 - Financial Cross-ownership And Information Dissemination In
A Supply Chain
Noam Shamir, Tel-Aviv University, Coller School of Management,
Tel-Aviv, Israel, , Yossi Aviv
We study the effect of financial cross-ownership on two imperative operational
decisions in a supply-chain with competing retailers and a mutual supplier:
Information acquisition and production level. Financial cross-ownership describes
a situation in which an incumbent retailer holds non-voting stocks in an entrant
retailer. We demonstrate the significant operational effect of this investment tool.
At the production stage, financial cross-ownership results in lower production
level and reduced competition level. However, financial cross-ownership can
result in pro-competitive effects; it facilitates information acquisition, that can
benefit the consumers.
2 - Broader Market Coverage For Innovative Products With
Deliberate Supply Chain Leadership
Hyoduk Shin, UC San Diego Rady School of Management,
Vish Krishnan, Junghee Lee,
Oleksiy Mnyshenko
How can we achieve broader market coverage for innovative products, i.e.,
inclusive innovation? Grounded in industrial practice, we show that deliberately
choosing the contract leader and the investor in a multi-tiered supply chain can
have a significant impact on market coverage. We discuss leadership handovers
along the product life cycle.
3 - Manufacturer Rebate Competition In A Supply Chain With A
Common Retailer
Yunjie Wang, Hong Kong University of Science and Technology,
, Albert Y Ha, Weixin Shang
We consider manufacturer rebate competition in a supply chain with two
manufacturers selling substitutable products to a common retailer. We
characterize the manufacturers’ equilibrium rebate decisions and show how they
depend on several key factors such as the fixed cost of a rebate program,
competition intensity, cost effectiveness of rebate and the proportion of rebate-
sensitive consumers in the market. We also consider the case when the retailer
subsidizes the manufacturers to offer rebate.
4 - The Implications Of Visibility On The Use Of Strategic Inventory In
A Supply Chain
Abhishek Roy, University of Texas at Austin McCombs School of
Business, , Stephen M Gilbert,
Guoming Lai
It is now widely accepted that a retailer’s use of strategic inventory benefits both
the retailer and the manufacturer. However, it has typically been assumed that
the manufacturer has perfect information about the retailer’s level of inventory,
either by observing it directly, or by inference based on sales observations. Yet, in
reality, there are many situations in which a manufacturer may lack the ability to
observe either the sales or the inventory of the retailer. We investigate how this
lack of inventory observability affects the use of strategic inventory in a supply
chain, and how the possibility of strategic inventory shapes the information
preferences of the retailer and the manufacturer.
TC31
202C-MCC
Operations/Corporate Finance Interface
Sponsored: Manufacturing & Service Oper Mgmt, iFORM
Sponsored Session
Chair: Jie Ning, Case Western Reserve University, 10900 Euclid Ave,
Cleveland, OH, 44106, United States,
Co-Chair: Volodymyr O Babich, Georgetown University, 3700 O St NW,
Washington, DC, 20057, United States,
1 - Inventory And Signaling To Creditors
Jiri Chod, Boston College, Chestnut Hill, MA, United States,
Nikolaos Trichakis, Gerry Tsoukalas
We argue that by borrowing goods (e.g., through supplier trade credit) rather
than cash (e.g., through a bank), firms may be able to convey private information
to their creditors more efficiently. As a result, in-kind financing mitigates signaling
costs, rationalizing among others, why firms may prefer to finance their
operations through their suppliers. Our model suggests this preference can persist
even when in-kind lenders have no prior informational advantage and face
comparatively higher cost of capital, and is more pronounced when the borrowed
goods have higher margins or differentiation, or require less production effort.
2 - Innovative Financing For Sme Suppliers: Factoring, Reverse
Factoring And Retailer’s Engagement
Fasheng Xu, Washington University in St. Louis, St. Louis, MO,
Panos Kouvelis
We consider a pull supply chain with a large retailer and an SME supplier, who is
in need of short-term pre-shipment financing. The bank offers a fairly priced loan
and repayment failure leads to costly bankruptcy. Benefits of recourse factoring
are limited, but non-recourse factoring achieves surprisingly better performance
by eliminating market frictions. Further, we investigate two financing schemes in
reverse factoring: the partial credit guarantee (PCG) and the purchase order
commitment (POC). We find PCG can slightly reduce supplier’s financing cost,
meanwhile POC can lead to a win-win solution for the decentralized supply
chain, with even higher expected profit than the centralized one.
3 - R&D Investments In The Presence Of Free-riding And
Risk-shifting Incentives: Can Debt Financing Mitigate Under-
investment?
Jie Ning, Case Western Reserve University, Cleveland, OH,
United States, , Volodymyr O Babich
When information is a public good, in equilibrium firms under-invest (relative to
the social optimum) in acquiring it to free-ride on investments of other firms.
When firms are financed by debt, in equilibrium equity holders invest in riskier
projects relative to the firm-optimal. The interactions between these two
inefficiencies arise when risky investments are needed to acquire information that
becomes a public good, as in some R&D projects. We model these interactions in a
three-stage game with two firms and an external debt market. We show that the
presence of free-riding and risk-shifting incentives may lead to either under-
investment, over-investment, or socially optimal investment.
TC32
203A-MCC
Revenue Mgt, Pricing II
Contributed Session
Chair: Sareh Nabi Abdolyousefi, University of Washington, 2727 NE
55th Street, Seattle, WA, 98105, United States,
1 - A Pricing Setting Retailer Sourcing From Competing Suppliers
Facing Disruption
Xi Shan, Student, The University of Texas at Dallas, 800 W.
Campbell Road, Richardson, TX, 75080, United States,
, Suresh P Sethi”, Tao Li
We study the case of a price-setting retailer who sources from two strategic
suppliers subject to independent or correlated disruption and sets the retail price
upon delivery. We model this case as a Stackelberg-Nash game with the suppliers
as the leaders and the retailer as a follower, and obtain explicitly the equilibrium
of the game. We identify cases in which the retailer orders from one perfectly
reliable supplier and one unreliable supplier, and two correlated unreliable
suppliers. In the latter case, the equilibrium suppliers’ profits can increase in
supplier disruptions correlation, which is not consistent with the literature.
2 - Pricing Of Internet Dynamically Under Changing Capacity
Demet Batur, Assistant Professor, University of Nebraska - Lincoln,
CBA 209, Lincoln, NE, 68588-0491, United States,
Jennifer Ryan, Zhongyuan Zhao,
Mehmet C Vuran
Technological advancements created the TV white space (TVWS)—the
opportunity to use parts of the TV spectrum for Internet when and where the TV
channels are not actively used by broadcasting companies. The Internet capacity
generated from the emerging TVWS systems will change stochastically. Also, the
capacity needed by the customers for various Internet activities differ significantly,
e.g., email checking versus video streaming. We present a Markov Decision
Process model for the service provider to post dynamically changing prices to the
customers based on the current available capacity and the expected customer
usage with a revenue maximization objective.
TC30