2016 INFORMS Annual Meeting Program

SD30

INFORMS Nashville – 2016

SD30 202B-MCC Establishing Trust in Operations Sponsored: Manufacturing & Service Oper Mgmt Sponsored Session Chair: Ryan Buell, Harvard Business School, Boston, MA, United States, rbuell@hbs.edu 1 - Managing Supplier Risks Via Diversification Versus Improvement: An Experimental Evaluation Basak Kalkanci, Scheller School of Management, Basak.Kalkanci@scheller.gatech.edu Using economic experiments, we evaluate the performance of supplier diversification versus improvement to mitigate supply chain risks of a buyer facing suppliers with different costs and risk profiles. We show that the buyers diversify their orders more than theory and the orders are artificially inflated to benefit from quantity hedging. We also demonstrate that sourcing commitment may hurt a buyer by reducing the buyer’s supplier improvement effort, contrary to theory. 2 - Understanding And Managing Customer-induced Negative Externalities In Congested Self-service Environments Hyun Seok Lee, University of North Carolina at Chapel Hill, Chapel Hill, NC, 27514, United States, Hyunseok_Lee@kenan- flagler.unc.edu, Saravanan Kesavan, Vinayak Deshpande This paper identifies a new problem, i.e., the negative impact of congestion (using archival data at retailer A), demonstrates the mechanisms driving the problem (using observational data from field study at retailer B), proposes a solution to the problem, and discusses its implementation at two different retailers (using field experiments at retailers A and B). More importantly, we identify a new phenomenon called thwarting behavior, defined as a systematic change in customers’ behavior when they experience congestion that imposes negative externalities on other customers. 3 - The Impact Of Decision Rights And Long Term Relationships On Innovation Sharing We study a supplier’s incentives to share an innovation with a buyer when sharing the innovation increases efficiency but makes the supplier vulnerable to the buyer sharing it with other suppliers. We show, both theoretically and experimentally, that the supplier’s optimal decision depends on the length of the relationship and in particular, on how the buyer allocates decision rights among its employees. SD31 202C-MCC Issues in Supply Chains, Risk Management and Finance Sponsored: Manufacturing & Service Oper Mgmt, iFORM Sponsored Session Chair: Juan Camilo Serpa, McGill University, 1001 Rue Sherbrooke O, Montreal, QC, H3A 1G5, Canada, juan.serpa@sauder.ubc.ca 1 - Mitigating Disruption Cascades In Supply Networks Nitin Bakshi, London Business School, London, United Kingdom, nbakshi@london.edu, Shyam Mohan The losses from supply chain disruptions arise not only due to direct damage at firms, but also from the interruption of normal operations because of lack of supply; that is, due to disruption cascades from suppliers in the adjacent tiers and beyond. To curtail such losses, firms can make ex-ante investments in mitigation and recovery strategies. In this paper, we use a game-theoretic approach to study firms’ equilibrium investments, and the associated efficiency (in comparison with the centralized benchmark), and its dependence upon network topology. 2 - Cancelability In Trade Credit Insurance S. Alex Yang, London Business School, sayang@london.edu, Christopher J Chen, Nitin Bakshi Trade credit insurance (TCI) is a risk management tool commonly used by suppliers to guarantee against buyers defaulting when purchasing on credit. In most TCI policies, the insurer can cancel this “guarantee” during the insured period. We explore the role of cancelability in TCI. We find that the utility of cancelability in TCI is linked to the insurer’s monitoring role (tracking the buyer’s continued creditworthiness during the insured period, which enables the supplier to make more efficient shipping decisions). Our findings help explain the historical dominance of cancelable contracts in TCI, and they also offer insight into the recent industry trend of offering non-cancelable TCI coverage. Ruth Beer, Indiana University, Kelley School of Business, ruthbeer@indiana.edu, Hyun-Soo Ahn, Stephen Leider

3 - Trade Credit In Competition: A Horizontal Benefit Heikki Peura, London Business School, hpeura@london.edu S. Alex Yang, Guoming Lai Prior research has focused on how trade credit benefits firms by improving vertical supply chain relationships. We offer a novel perspective by examining whether trade credit benefits suppliers through a horizontal channel. Under the classic Bertrand framework, we analyze two competing firms’ price decisions with and without trade credit, and find that when the firms are financially constrained, trade credit allows them to soften horizontal price competition. Studying the firms’ optimal contract choice, we further find that this horizontal benefit of trade credit may complement its vertical roles. SD32 203A-MCC Scheduling IV Contributed Session Chair: Yumei Huo, Associate Professor, City University of New York, 2800 Victory Boulevard, 1N 215, Staten Island, NY, 10314, United States, yumei.huo@csi.cuny.edu 1 - An Improved Algorithm On Two-stage Scheduling With An Outsourcing Option Kangbok Lee, City University of New York, York College, 94-20 Guy R Brewer Boulevard, Queens, NY, 11451, United States, kangbok.lee3@gmail.com, Xiaojuan Jiang, An Zhang, Yong Chen, Guangting Chen We consider a two-stage scheduling problem with an outsourcing option where each operation can be outsourced. The objective is to minimize the sum of the makespan and the total outsourcing cost where the outsourcing cost of an operation is the product of the operation’s processing time and the unit processing time cost of that stage. There was a study on Greedy algorithm with regard to the worst-case analysis. In this work, by reanalyzing the Greedy algorithm, we derive the tight worst-case performance ratio and proposed a new approximation algorithm with a better worst case performance ratio. 2 - Can Distance-driven Online Scheduling Be Better Than Order-driven? KeLin Luo, Xi’an Jiaotong University, Xianning West Road 29, Xi’an, 710049, China, luokelin@stu.xjtu.edu.cn Taxi arrangement, instance delivery, and intra-city express has been considered as a dispensable part of everyday life. The orders appear in real-time and in a certain area. The serving net is established by summarizing the order’s properties, including time distribution, periodic distribution, and regional distribution. Then we can redefine the orders according their time and physical distances by special numbers, such as non-increasing numbers. We presented an online algorithm and verified the effectiveness and efficiency of this algorithm by comparing it with the order-driven scheduling. We refrain from the myopia of local optimum or global optimum accompanying with the substantial cost. 3 - A Dynamic Lot Sizing Based Discounted Cash Flow Model Considering Working Capital Requirement Financing Costs Thomas G Yeung, Associate Professor, Ecole des Mines de Nantes, 4 rue Alfred Kastler BP 20722, La Chantrerie, Nantes, 44307, France, thomas.yeung@mines-nantes.fr, Yuan Bian, David Lemoine, Nathalie Bostel-Dejax, Jean-Laurent Viviani, Vincent Hovaleque Companies always need free cash flow to efficiently react against uncertainty and ensure solvency. However, classical dynamic lot-sizing models only consider the physical flow of products. In this paper, we introduce a first link between the dynamic lot-sizing problem and financial aspects of working capital requirements (WCR). We propose a new generic WCR model along with a dynamic lot-sizing- based discounted cash flow model for single-site, single-level, single-product and infinite capacity cases. A polynomial algorithm is also presented with numerical tests in order to compare our approach with the traditional dynamic lot-sizing approach. 4 - Two Machine Scheduling Subject To Arbitrary Machine Unavailability Yumei Huo, Associate Professor, City University of New York, 2800 Victory Boulevard, 1N 215, Staten Island, NY, 10314, United States, yumei.huo@csi.cuny.edu We study two machine scheduling subject to arbitrary machine unavailability. The jobs are resumable. We consider both the single criterion and the bi-criteria problems concerning makespan and the total completion time. Liu and Sanlaville have shown that makespan minimization problem is solvable in polynomial time, leaving other three optimization problems still open: total completion time; total completion time subject to the constraint that the makespan is minimum; and makespan subject to the constraint that total completion time is minimum. In this research, we show all these three open problems are in P by giving optimal polynomial time algorithms.

104