2016 INFORMS Annual Meeting Program

MA31

INFORMS Nashville – 2016

MA29 202A-MCC Improving Supply Chain Responsibility Through Regulation and External Actions Sponsored: Manufacturing & Service Oper Mgmt, Sustainable Operations Sponsored Session Chair: Robert Swinney, Duke University, Durham, NC, United States, robert.swinney@duke.edu 1 - Pollution Regulation And Market Structure: Equilibria, Profits And Welfare Effects Krishnan S Anand, University of Utah, 1655 E Campus Center Dr Rm 7211, David Eccles School Of Business, Salt Lake City, UT, 84112, United States, anand@eccles.utah.edu Francois C. Giraud-Carrier Opponents of pollution regulation claim that regulations choke businesses, hurt welfare and destroy economic growth. We model two popular regulations— Cap- and-Trade and Taxes— under imperfect competition, and prove that well-chosen regulation can simultaneously improve firms’ profits, consumer surplus and welfare. Further, firms can be induced to perfectly internalize their pollution externalities, without being charged a penny in taxes. Our results suggest that the paramount factor in framing pollution regulations should be their impact on consumers rather than on producers. 2 - Extended Producer Responsibility (EPR) For Pharmaceuticals Following their popularity for non-consumables, EPR-based implementation models have gained traction for managing pharmaceutical overage. We analyze the effectiveness of these models for pharmaceuticals, particularly Source Reduction (SR) and End-of-Pipe Control (EC), by developing a game-theoretic model of pharmaceutical chain with a focus on factors causing overage. We show that the pharmaceutical context may imply stronger preference for adopting the EC model as compared to non-consumables. We also show that an alignment of stakeholder preferences for the model choices can be achieved under a larger set of conditions for pharmaceuticals. 3 - Prevention Or Prosecution: An Analytical Approach To Modern Slavery In Supply Chains Shawn Bhimani, Duke University, Durham, NC, United States, shawn.bhimani@gmail.com We explore current human trafficking prevention schemes by modeling the interaction between a regulator and a business. By analyzing the incentive systems at play, we provide insights on how to effectively motivate integral stakeholders in the fight against corrupted supply chains. MA30 202B-MCC Sustainable Operations I Sponsored: Manufacturing & Service Oper Mgmt Sponsored Session Chair: Basak Kalkanci, Georgia Institute of Technology, Atlanta, GA, United States, basak.kalkanci@scheller.gatech.edu 1 - Operational Challenges For Distributed Manufacturing In Developing Countries Andre Du Pin Calmon, INSEAD, Fontainebleau, France, andre.calmon@insead.edu We model and analyze a distributed manufacturing system set-up by a social enterprise that produces fashion accessories in Kenya. This company selects and works with a network of small artisan workshops with diverse characteristics in terms of quality and production capacity. Furthermore, when adding a new workshop to the network, there is uncertainty regarding that workshop’s features and performance. We model the problem of allocating production orders to workshops as a stochastic learning problem. We also allow for “fairness” constraints, which encode the company’s social objectives. We illustrate the performance of different allocation policies through numerical simulations. Isil Alev, Boston College, isil.alev@bc.edu Atalay Atasu, Beril L Toktay, Ozlem Ergun

2 - Sustainable Operations Versus Corporate Social Responsibility: A Cross – Country Analysis Of Value Chain Transparency Ryan Buell, Harvard Business School, rbuell@hbs.edu Basak Kalkanci We study the differential impact of transparency into a company’s sustainable operations relative to transparency into its “extracurricular” CSR activities. Through a series of cross-country experiments engaging participants in the US, India, China, Bangladesh, Mexico, and Turkey, we explore whether stakeholders respond more favorably to transparency that reveals sustainable operations (e.g. reducing water consumption or paying a living wage) than to transparency that reveals sustainable investments that fall outside the operation (e.g. donating an equivalent amount of drinking water or investing an equivalent amount in the community around a factory). 3 - A Dynamic Mechanism For Achieving Sustainable Supply Of High Quality Products Fang Liu, Nanyang Technological University, Singapore, Singapore, Liu_Fang@ntu.edu.sg, Tracy Lewis, Jing-Sheng Jeannette Song Several leading companies have realized the importance of sustainable quality supply and have initiated programs to achieve it. This paper investigates whether the guidelines in such programs provide the right incentives and information structures for all parties to participate in order to achieve the intended long-term goals. 4 - New Business Models For Industrial Park Operators Ioannis Siskos, Kuhne Logistics University, ioannis.siskos@the-klu.org, Luk N Van Wassenhove Industrial parks operators (IPOs) are interested in symbiotic projects developed in their parks. We use static monopoly and competition modelling in order to explore the cost and pricing conditions under which by-product synergies that are not realized by the candidate firms would be undertaken by the IPO. Energy and Commodity Merchant Operations Sponsored: Manufacturing & Service Oper Mgmt, iFORM Sponsored Session Chair: Selvaprabu Nadarajah, College of Business, University of Illinois at Chicago, 601 S Morgan St, Chicago, IL, 60607, United States, selvan@uic.edu 1 - Risk Neutral And Risk Averse Approximate Dynamic Programming Methods For Bidding In The Energy Market Daniel R. Jiang, University of Pittsburgh, Pittsburgh, PA, 15261, United States, drjiang@pitt.edu, Warren B Powell In order to better assess the value of energy storage, we consider the problem of bidding into an hour-ahead market with the goal of “trading” physical energy, i.e., performing energy arbitrage. We describe an approximate dynamic programming method that exploits the monotone structure of the problem in order to obtain near-optimal bidding strategies for a risk-neutral formulation of the objective function. Additionally, in this application (and many others), it can be important to incorporate risk-aversion into the decision making process. We discuss a method that allows us to construct risk-averse bidding polices, optimized under dynamic quantile-based risk measures. 2 - Keeping Options Open When Just One Can Be Exercised: When To Pick A Winner Daniel Ralph, University of Cambridge, d.ralph@jbs.cam.ac.uk Rutger-Jan Lange Given several, costly R&D projects for low carbon electricity, when should be any be abandoned to eventually pick the winner? We study parallel competing projects where the performance of each project is governed by a general Ito process, while opportunities to drop underperforming options (or select the winner) follow a Poisson process. We show how to construct the option value as the limit of an increasing sequence of lower bounds. This general multidimensional theory underlies many complex real-world stopping decisions, and offers the first opportunity to solve this class of problems optimally. MA31 202C-MCC

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