2016 INFORMS Annual Meeting Program

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INFORMS Nashville – 2016
507
WE74
Legends B- Omni
Ops/Economics Inter
Contributed Session
Chair: Huaqing Wang, Assistant Professor, Emporia State University,
1 Kellogg Circle, Emporia, KS, 66801, United States,
1 - Optimal Bundling Of Information Goods In A Duopoly
Araz Khodabakhshian, UCLA Anderson School of Management,
501 Gayley Avenue, Apt 11, Los Angeles, CA, 90024,
United States,
Uday S Karmarkar, Guillaume Roels
Bundling is a common practice in several business sectors, but there are also
many examples of firms that choose not to bundle. We study bundling in the
presence of competition to examine its implications for bundling strategy. We
model the bundling strategy of two firms offering two products to two customers
as a two-stage non-cooperative game. In the first stage, firms choose their product
offering combinations. In the second, they simultaneously choose prices for their
offerings. We consider two extreme cases of perfectly positively and perfectly
negatively correlated customer valuations. We show that in equilibrium, only one
of two competing firms chooses to bundle.
2 - Launching Next Generation Products In A Competitive Market
Xishu Li, Erasmus University, Mandeville (T) Building, Room 9-56,
Erasmus University, Rotterdam, 3062PA, Netherlands, ,
Rob A Zuidwijk, M.B.M. (Rene) de Koster
We consider a next-generation product launch problem in a competitive market
under uncertain product quality and consumer taste. We focus on two levels of
competition: 1) next-generation product competes with the existing product for
capacity and demand; 2) firm competes with its competitor for product quality,
market share and price.
3 - Retailer Strategic Pricing Under Sticky Demand
Zheng Li, Student, Texas A&M University, 263 Navarro Dr, College
Station, TX, 77845, United States, , Haoying Sun,
Xirong Chen, Haipeng Chen
The literature on dynamic pricing assumes that consumer demand responds to
any changes in price. Recent advances in economics, however, have suggested
that consumers may be rationally inattentive and not respond to small price
changes, resulting in demand stickiness. We explicitly model the implications of
this sticky demand on firm’s pricing behaviors. Using a large dataset consisting of
eight years of weekly grocery retail data, we estimate the magnitude of demand
stickiness and demonstrate how the estimates vary with consumer demographics.
Furthermore, we conduct a counterfactual analysis showing the profit
improvement a retailer could enjoy by taking into account this demand stickiness.
4 - Association Between Relatedness In Diversification And
Performance Of Us Public Firms
Muhammad Zubair, Nanyang Business School, 50 Nanyang
Avenue, Blk S3-01B-73, Singapore, 639798, Singapore,
, Chen Chien-Ming
This study empirically examines the link between relatedness in the
diversification of a firm and its inventory performance. The study is based on
firms’ annual financial and segment sales data in addition to US industry input-
output data.
5 - Product Quality Differentiation Through Information Provision
Huaqing Wang, Assistant Professor, Emporia State University,
1 Kellogg Circle, Emporia, KS, 66801, United States,
, Haresh B Gurnani, Raphael Boleslavsky
We examine the joint interaction of information provision and pricing decisions
by two competitive firms when a buyer is uncertain about product valuations.
Firms generate product differentiation by allowing consumers to learn about
valuations or prevent them from doing so. We characterize equilibrium prices and
its interaction with information policies.
WE75
Legends C- Omni
Ops/Finance & Economics
Contributed Session
Chair: Panayotis Markou, IE Business School, Calle Maria de Molina
12, Bajo, Madrid, 28006, Spain,
1 - How To Handle Extreme Supply Chain Situation
Wenqing Zhang, University of Minnesota Duluth, 1318 Kirby
Drive, Labovitz School of Business and Economics, Duluth, MN,
55812, United States, ,
Prasad Padmanabhan, Chia-Hsing Huang
We investigate the impact of industry market concentration on the ability of firms
with adventurous and rational managers to deal with extreme cash flows. We
provide simulation results on how market concentration (from a monopoly to a
perfectly competitive structure), influence the NPV decisions of firms with
different manager/cash flow types. While prices to consumers are higher under a
monopoly, they may provide additional benefits to society in the form of having
extended ability to survive extreme cash flows.
2 - Organizational Design: Scale, Scope, Focus And Decentralization
Phillip J Lederer, Professor, University of Rochester, Box 270100,
Rochester, NY, 14627, United States,
Scale, scope, focus and decentralization affect the design of management
hierarchy that monitors and controls production. Modeled as a network of
information processors, an optimal design minimizes capacity and time delay
costs. Among the results are: sufficient conditions that induce “product” and
“process focus are derived. Large changes in cost don’t much change the
hierarchy’s departmental structure but greatly affect capacity allocation. Local
decision making has a much larger effect on hierarchy’s height than large delay
cost. Staff utilization falls with level.
3 - Volatility Spillover Dynamics In Chinese Steel Markets
Wen Fang, Xidian University, Xi’An, China,
The development of steel market plays an important role in the development of
China’s bulk stock commodity market. China has emerged a typical steel market
—— steel electronic market, which is in the process of vigorous development.
Three types of steel market coexisting is a realistic background and trend in
Chinese steel industry. Our research focuses on volatility spillover in Chinese steel
markets. The objective of our research is to reveal which steel market is a strong
barometer for the steel price fluctuations. A dynamic multi-dimensional volatility
spillover method based on GARCH model and Kalman filter is proposed aiming at
the volatility dynamics research in Chinese steel markets.
4 - Optimal Design Of Discrete Dutch Auction With Time Limitation
Jinfeng Yue, Middle Tennessee State University, Department of
Managment and Marketing, Murfreesboro, TN, 37132, United
States, Jinfeng Yue, Shanghai University of
Finance and Economics, Shanghai, China,
Zhen Li
This research concerns the optimal design of discrete Dutch auction. It explains
why Dutch auction is a fast auction; a secret reserve price alone cannot improve
the auction outcome, but its influence can be achieved through the existence of
strategic shoppers and the magnitude of their salvage values; the knowledge
about bidding population size yields a higher expected revenue per unit of time.
5 - The Effects Of Financial And Operational Hedging On Operational
Variables: Evidence From The Gold Mining Industry
Panayotis Markou, IE Business School, Calle Maria de Molina 12,
Bajo, Madrid, 28006, Spain, ,
Daniel S Corsten
Prior analytical models of hedging are sometimes contradictory, and the exact
mechanism by which hedging affects operations is not well understood. We use a
detailed data set comprising the financial and operational hedging decisions of 82
gold miners from 2003 to 2011 to analyze the effects of risk management on
inventory and profit variance. Gold miners can utilize operational hedging, yet
this strategy increases inventory and profit variance. Financial hedging is also
used to mitigate price risk, and this reduces inventory and profit variance. When
used simultaneously, the financial hedge controls the operational hedge, resulting
in significant reductions in inventory and profit variance.
WE76
Legends D- Omni
Decision Analysis
Contributed Session
Chair: Tao Du, Beijing Insititute and Technology, Beijing, China,
1 - The Impact Of Capability Portfolio on Competitive Position
Between Industry Duopoly
Yanyun Zhang, Guanghua School of Management, Peking
University, Beijing, China,
We attempt to study the impact of a firm’s capability portfolio on performance
between industry duopoly with Stackelberg model. The weaker position firm
owns its specific advantages, regarding as its capability as well as for the stronger
one. Meanwhile, the capability’s contribution weight differs. A firm faces a risk of
failure when the performance is lower than a certain threshold. Respectively from
static and dynamic perspectives, we know how to balance capabilities to
overcome the competitors, or to remain competitive and whether to strengthen
or weaken the capability to improve the competitive position where firm’s
performance varies with the boundary changes of the firm’s capability.
WE76