Informs Annual Meeting Phoenix 2018

INFORMS Phoenix – 2018

MA19

2 - Show or Tell: What Improves Agent Decision Making in the Mobile Money Industry? - Evidence from a Field Experiment in Tanzania Jason Acimovic, Penn State University, 462 Business Building,

3 - Optimal Procurement Contracts under Hidden Information and Actions about Supply Disruptions Xi Shan, University of Texas at Dallas, Richardson, TX, 75075, United States, Chenglin Zhang, Suresh P. Sethi We consider a supply chain in which a retailer (the principal) facing a stochastic demand orders from a supplier (the agent) subject to supply disruption. The supplier has private information on his initial supply reliability, which he is able to improve upon when needed by an effort not observed by the retailer. We find a contract menu, consisting of an order quantity along with a transfer payment and a penalty if there is no delivery, which induces the supplier to reveal his private information. We show that the supplier under the contract would exert less than the first-best effort. Moreover, it is not optimal for the contract to require the supplier to exert an effort to become fully reliable. 4 - Procurement Mechanism Design for Assembler under Asymmetric Information Jennifer K. Ryan, Dept of Supply Chain Management & Analytics, College of Business Administration, Lincoln, NE, 68588-0491, United States, Zhaolin Li, Lusheng Shao, Daewon Sun Assembly systems are found in a variety of industries, such as consumer electronics. In many practical settings, the assembler possesses incomplete information regarding the marginal cost of each supplier. This lack of complete information poses a challenge for the assembler in designing contract mechanisms. We propose a contract that is incentive compatible in dominating strategies (ICDS), ensuring that every supplier truthfully reveals their own production cost, regardless of how the other suppliers might behave. We also introduce a hybrid mechanism, under which the complexity of the contract offered to a given supplier depends on the importance of that supplier to the assembler’s profit. n MA19 North Bldg 128B Advances in Pricing and Revenue Management Sponsored: Revenue Management & Pricing Sponsored Session Chair: Ruxian Wang, Johns Hopkins University, Carey Business School, Baltimore, MD, 21202, United States 1 - Pricing of Services Ozlem Yildiz, University of Virginia, Darden School of Business, 100 Darden Blvd. Darden School of Business., Office: FOB 189, Charlottesville, VA, 22903, United States, Dana Popescu In this paper we analyze simple pricing strategies for access services. We characterize the optimal service (flat fee) price as well as the optimal resource (usage) price. We then identify the conditions under which service pricing outperforms resource pricing and analyze the performance of simple service and resource pricing heuristics. 2 - Pricing Problems under the Markov Chain Choice Model A. Serdar Simsek, University of Texas-Dallas, Naveen Jindal School of Management, 800 W. Campbell Road, Richardson, TX, 75080, United States, James Dong, Huseyin Topaloglu We consider three fundamental pricing problems when customers choose under the Markov chain choice model. First, for the monopolistic pricing problem, we show how to compute the optimal prices efficiently. Second, for the competitive pricing problem, we show that a Nash equilibrium (NE) exists, prove that NE prices are no larger than the prices set by a central planner and characterize NE that Pareto dominates all other Nash equilibria. Third, for the dynamic pricing problem with a single resource, we prove structural properties of the optimal prices. We also report on numerical analyses. 3 - Attribute-based Modeling of Product Recommendations Sajad Modaresi, Assistant Professor of Operations Management, UNC Chapel Hill, Chapel Hill, NC, 27599, United States, Denis R. Saure, Fernando Bernstein We study efficient real-time data collection approaches for an online retailer that dynamically personalizes the assortment offerings based on customers’ attributes (e.g., gender and age). We propose policies that leverage the transaction data of customers with similar attributes to expedite the learning process and maximize revenue. We prove that the proposed policies are near-optimal and test their performance using a dataset from a large Chilean retailer. 4 - Pricing Ancillary Service Subscriptions Ozge Sahin, Johns Hopkins University, 100 International Drive, R1288, Baltimore, MD, 21231, United States We investigate heterogeneous customer choice behavior in the presence of main products, ancillary services with options of pay-per-use and subscription. Ancillary service subscriptions may result in “win-win for the firm, competitors and customers in a variety of monopolistic and duopolistic scenarios. Ancillary service subscription can help firms to better price-discriminate heterogeneous customers through different subscription decisions and subsequent main product purchase behavior.

University Park, PA, 16802, United States, Christopher Dalton Parker, David F. Drake, Karthik Balasubramanian

Two key decisions operations managers must make when designing systems to support their employees are: 1) what guidance to deliver, and 2) what kind of training (if any) to provide. We examine these choices in the context of mobile money platforms. In partnership with a Tanzanian mobile money operator, we perform a randomized controlled trial to examine how differing types of guidance and training impact the agents’ inventory management. Agents who are trained in person and receive an explicit recommendation are less likely to stockout of electronic currency during the day. 3 - Multi Stakeholders Perspectives on the Impacts of Safety Violation: An Event Study of Manufacturing Firms Chris Lo, Hong Kong Polytechnic University, Hong Kong, Di Fan, Yi Zhou We conducted a safety violation event study in the US and we found market react negatively. If the violation happened in the non-Republicans states and in the presence of labour union, the abnormal returns of stock price were more negative. It is the first evidence that the political leadership could moderate firm’s abnormal stock return on social issue. To confirm our prediction, we found that both the number of violations and inspections significantly decreased after a Democrats state changed to Republican state. The enforcement of safety regulation weaken in Republicans’ tenure and investors reacted accordingly. It shows that a political neutral structure is necessary for social governance. 4 - Operations Management Challenges in a “Cloud Factory”: Distributed Manufacturing of Handmade Goods in Kenya Andre Du Pin Calmon, INSEAD, Boulevard de Constance, Fontainebleau, 77300, France, Victor Araman, Anton Ovchinnikov Motivated by a social enterprise in Kenya that manufactures fashion accessories using a distributed network of artisans, we analyze the operational challenges of managing a decentralized “virtual” or “cloud factory. The artisans have limited capabilities and varying production quality, while the company faces uncertain demand. We investigate operational issues that emerge in this unique setting by formulating the scheduling problem faced by the manufacturer as a stochastic dynamic optimization problem. We present preliminary results and numerical experiments. n MA18 North Bldg 128A Sourcing, Inventory and Pricing in Consumer Goods Supply Chains Sponsored: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Candace Arai Yano, University of California-Berkeley, Berkeley, CA, 94720-1777, United States 1 - Wine Analytics: The Impact of Weather and Market on En Primeur Prices Mert Hakan Hekimoglu, Rensselaer Polytechnic Institute, 110 8th Street, Pittsburgh Building, Troy, NY, 12180, United States, Burak Kazaz Many businesses in the wine industry do not engage in wine futures (also, known as En Primeur) because they cannot predict the release prices in order to make efficient plans and purchasing arrangements. Our work provides guidance to winemakers in their price selection, and buyers (negociants, distributors, merchants) on the appropriateness of these prices. We examine empirically how weather and market fluctuations influence the release prices of fine wine. Higher temperatures and appreciation in the Liv-ex 100 index as market indicator Candace Arai Yano, University of California-Berkeley, IEOR Department, 4141 Etcheverry Hall, Berkeley, CA, 94720-1777, United States, Bo Liao, Minakshi Trivedi We study the effects of sourcing and pricing power on optimal store-brand quality under three sources (in-house, a national-brand manufacturer with a competing product, and a strategic third-party manufacturer), and under two types of price leadership (Manufacturer-Stackelberg and Retailer-Stackelberg). We characterize the retailer’s optimal quality levels and their relative values across the six scenarios and present other equilibrium results. Among other things, we show that the retailer optimally uses the quality level both for differentiation and to induce competition between suppliers, and that the power to decide the source is more important to the retailer than having pricing power. increase prices while higher levels of precipitation reduce them. 2 - How Sourcing and Price Leadership Affect Optimal Store-Brand Quality

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