2015 Informs Annual Meeting

MB46

INFORMS Philadelphia – 2015

MB44 44-Room 103B, CC Joint Session RMP/HAS: Health Care Pricing Sponsor: Revenue Management and Pricing Sponsored Session Chair: Margret Bjarnadottir, Assistant Professor of Management Science and Statistics, Robert H. Smith School of Business, University of Maryland, 4324 Van Munching Hall, College Park, MD, 20742, United States of America, margret@rhsmith.umd.edu Co-Chair: Wedad Elmaghraby, Associate Professor, University of Maryland, University of Maryland, 4311 Van Munching Hall, College Park, MD, 20742, United States of America, welmaghr@rhsmith.umd.edu 1 - Drug Pricing for Pharmaceutical Manufacturers Distributing through a Common PBM We model the competition among branded drug manufacturers on prices when contracting with a common PBM, who manages the prescription drugs of all manufacturers on behalf of their clients. We analyze the PBM’s optimal formulary design problem and characterize the equilibrium pricing behavior of competing drug manufacturers. We discuss the impact of various parameters on the equilibrium outcomes for plan enrollees, PBM, and drug manufacturers. 2 - Bundle Payments vs. Fee-for-Service: Impact of Payment Scheme on Performance Elodie Adida, University of California at Riverside, Riverside, CA, elodie.goodman@ucr.edu, Hamed Mamani, Shima Nassiri Healthcare payments in the US have been based on a fee-for-service scheme, which provides incentives for high volume of care. The new healthcare legislation tests Bundled Payments that remove such incentives. We analyze effects of different payment schemes on the extent of patient selection and treatment intensity decisions by a risk-averse provider. We benchmark performance on the socially optimal outcome. We investigate modified payment systems that induce this social optimum. 3 - Information Elicitation and Influenza Vaccine Production Sameer Hasija, Assistant Professor, INSEAD, 1 Ayer Rajah Avenue, Grange Heights, Singapore, Singapore, Sameer.Hasija@insead.edu, Javad Nasiry, Stephen Chick We explore the procurement of influenza vaccines by a government whose objective is to minimize the expected social costs (including vaccine, vaccine administration, and influenza treatment costs) when a for-profit vaccine supplier has production yield uncertainty, private information about its productivity (adverse selection) and potentially unverifiable production effort (moral hazard). MB45 45-Room 103C, CC Dynamic Pricing: Learning, Personalization, Equilibrium, and Consumer Benefit Sponsor: Revenue Management and Pricing Sponsored Session Chair: Stefanus Jasin, Stephen M. Ross School of Business, University of Michigan, Ann Arbor, MI, United States of America, sjasin@umich.edu 1 - Dynamic Pricing and Learning with Online Retail Rankings Arnoud Den Boer, Assistant Professor, University of Twente, Gebouw Zilverling, kamer 4013, Drienerlolaan 5, Enschede, 7522 NB, Netherlands, a.v.denboer@utwente.nl, Bora Keskin In online market environments such as Amazon or Google Shopping, firms receive advertisement space if they satisfy certain conditions. It is beforehand not clear if the benefits of this increased exposure outweigh the potential costs. We investigate this question in a dynamic pricing-and-learning setting. . Nan Yang, Assistant Professor, University of Washington at St. Louis, St. Louis, MO, 63130, United States of America, yangn@wustl.edu, Yixuan Xiao, Panos Kouvelis

2 - Personalized Assortment Planning with Finite Inventory and Demand Uncertainty David Simchi-levi, Professor, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Cambridge, MA, 02139, United States of America, dslevi@mit.edu, Clark Pixton Motivated by the trend among consumers of smartphone usage for shopping online, we develop an algorithm for personalized assortment optimization over a finite horizon with finite inventory, in the case where customer choice parameters are not known. The algorithm simultaneously balances short term revenues, marginal cost of inventory, and exploration to achieve good performance in terms of regret. 3 - Stochastic Market Equilibrium for RM Florin Ciocan, INSEAD, Boulevard de Constance 77305, Fontainebleu, France, florin.ciocan@insead.edu, Vahab Mirrokni, Mohammadhossein Bateni, Yiwei Chen We present a dynamic pricing scheme for a seller who is allocating a volatile stream of goods to a set of budgeted buyers. Our prices are computed as a stochastic market equilibrium. We provide performance guarantees both in terms of revenues for the seller and in terms of fairness for the buyers. We apply our scheme to online ad allocation and using a dataset from a large ad network we empirically compare the performance of out scheme with the second price ad auction which is currently run. 4 - Do Consumers Benefit from Dynamic Pricing? Guillermo Gallego, Columbia University, 820 CEPSR, 530 West 120th Street, MC 470, New York, NY, 10027, United States of America, gmg2@columbia.edu, Ningyuan Chen Inuitively, the seller benefits from dynamic pricing by extracting more of the consumers’ surplus. Is this right? We start by looking at simpler questions: Do consumers prefer random prices? Is the consumer surplus a decreasing convex function of price? Is the optimal price an increasing concave function of cost? If true, is dynamic pricing better than optimal fixed pricing for consumers? We show that the answer to these questions are positive most of the time, but there are some exceptions. The Economics and Operation of Vehicle Sharing Sponsor: Manufacturing & Service Oper Mgmt/Service Operations Sponsored Session Chair: Saif Benjaafar, Professor, University of Minnesota, 111 Church Street SE, Minneapolis, MN, 55455, United States of America, saif@umn.edu Co-Chair: Guangwen Kong, University of Minnesota, 111 Church Street SE, Minneapolis, MN, 55414, United States of America, gkong@umn.edu 1 - Contracting with Overconfident Customers in Car Sharing Guangwen Kong, University of Minnesota, 111 Church Street SE, Minneapolis, MN, 55414, United States of America, gkong@umn.edu, Diwakar Gupta Although the economic and environmental benefits of car-sharing services are well documented, many potential customers are reluctant to utilize such services. This has been attributed to, in part, the lack of flexibility of short-term rental contracts. We study potential impact of customers’ overconfidence when making reservations, and design the contracts that incorporate customers’ bounded rationality. 2 - Inventory Rebalancing in Vehicle Sharing Networks Saif Benjaafar, Professor, University of Minnesota, 111 Church Street SE, Minneapolis, MN, 55455, United States of America, saif@umn.edu, Xiaobo Li, Xiang Li We study the problem of inventory rebalancing in vehicle sharing networks. We characterize the structure of an optimal policy. 3 - Dynamic Service Management of One-way Car Sharing Systems Ho-Yin Mak, University of Oxford, Saod Business School, Park End Street, Oxford, United Kingdom, makho06@gmail.com, Guangrui Ma One-way car sharing services (e.g., Car2go) are gaining popularity. The key operational challenge is unbalanced flow of vehicles within the service region, as customers are allowed to return cars anywhere within the service region. We investigate dynamic service blocking, i.e., restrictions of the set of return locations, as a possible measure to counter imbalance. We formulate a model that determines the blocking policy dynamically, incorporating customer destination choice behavior. MB46 46-Room 104A, CC

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