2016 INFORMS Annual Meeting Program

MB29

INFORMS Nashville – 2016

MB29 202A-MCC

2 - How Does Precision Affect The Adoption Of Energy Efficiency Practices? - Evidence From The Field And Laboratory Data Suresh Muthulingam, The Pennsylvania State University, State College, PA, United States, suresh@psu.edu, Saurabh Bansal This study aims to provide a comprehensive picture of how precision can affect the adoption of energy efficiency initiatives. We utilize three studies that start by establishing the impact of precision on the adoption of energy efficiency initiatives and then examine the mechanisms that govern how precision affects the adoption decisions. We find that precision has a positive impact on the adoption of energy efficiency practices. Additionally, the impact of precision is more pronounced in the presence of budgetary constraints. Finally, we identify trust as an important moderator of the precision effect. 3 - Government Subsidies For Green Technology Development Under Technology Uncertainty Seung Hwan Jung, Washington University in St. Louis, St Louis, MO, United States, seunghwan.jung@wustl.edu, Tianjun Feng, Fuqiang Zhang This paper investigates the subsidy design problem for green technology development by firms in an evolving market. We find that the subsidy plays a key role in improving social welfare under different industry environments. We also derive insights into how the subsidy policy affects firms’ operational strategy. 4 - Price Vs. Revenue Protection: An Analysis Of Government Subsidies In The Agriculture Industry Foad Iravani, University of Washington, Seattle, WA, United States, firavani@uw.edu, Saed Alizamir, Hamed Mamani The agriculture industry plays a critical role in the U.S. economy and various industry sectors depend on the output of farms. To protect farmers’ income, the U.S. government offers two subsidy programs to farmers: the PLC program which pays farmers a subsidy when the market price of a crop falls below a reference price, and the ARC program which pays a subsidy when a farmer’s revenue is below a guaranteed level. We develop models to analyze the effects of these programs on consumers, farmers, and the government. We calibrate our model with USDA data and provide insights about the effects of crop characteristics and market characteristics on the relative performance of PLC and ARC. MB31 202C-MCC Operations and Finance Interface Sponsored: Manufacturing & Service Oper Mgmt, iFORM Sponsored Session Chair: Fehmi Tanrisever, Bilkent University, 6800 Bilkent, Ankara, Turkey, tanrisever@bilkent.edu.tr 1 - Mitigating Disruption Risks In Delivery Supply Chains To Serve Contracted Customers Mert Hakan Hekimoglu, Rensselaer Polytechnic Institute, Troy, NY, United States, hekimm@rpi.edu, John H Park, Burak Kazaz Motivated by an implementation in a Fortune 150 company, this paper helps a firm determine its capacity expansion decisions as a mitigation strategy against disruptions in a delivery supply chain. We formulate the firm’s capacity planning problem using a two-stage stochastic model. While risk aversion generally leads to an increase in capacity investment, we find a surprising result that capacity may decrease with risk aversion. Our capacity expansion model is projected to make a 48% savings in the total expected operating costs stemming from disruptions under risk aversion. 2 - Competitiveness Of Supply Chains: A Financial Market Perspective Gerd J. Hahn, German Graduate School of Management and Law, Heilbronn, Germany, gerd.hahn@ggs.de, Jochen Becker In this paper, we analyze supply chain performance across various industries using financial statement and stock market data. By this means, we identify relevant value drivers from a supply chain perspective and show their impact on market valuation. 3 - Managing Price And Demand Risk In Flour Milling

Incentive Mechanisms and Sustainability Sponsored: Manufacturing & Service Oper Mgmt, Sustainable Operations Sponsored Session Chair: Xi Chen, University of Michigan-Dearborn, 2290 HPEC, 4901 Evergreen Rd, Dearborn, MI, 48128, United States, xichenxi@umich.edu 1 - Distribution Strategies For Supporting Poor Retailers In Developing Countries Luyi Gui, The Paul Merage School of Business, UC Irvine, luyig@uci.edu We analyze cooperative distribution strategies for supporting poor retailers in in the rural areas of developing countries that lack efficient infrastructure and distribution channels. We examine the effectiveness of two distribution strategies that are widely observed in practice: (1) purchasing cooperatives, (2) non-profit wholesaler. In particular, we consider how these mechanisms can promote the number of poor retailers and consumer welfare. 2 - The Impact Of Product Design On Closed Loop Supply Chain Coordination: Incentives For Input Material Reduction Vs. Enhanced Recycling Tolga Aydinliyim, Baruch College, Tolga.Aydinliyim@baruch.cuny.edu, Eren Basar Cil, Nagesh N Murthy We consider a setting wherein a buyer procures standard-size forgings from a supplier, and performs machining, which yields final components and significant scrap. Adopting a principal-agent framework, we investigate coordination implications while accounting for information asymmetry issues, and find that improved recycling across the supply chain can significantly mitigate decentralization cost. 3 - The Effectiveness Of Consumption- Versus Production-based Emission Tax Under Demand Uncertainty Xi Chen, University of Michigan-Dearborn, xichenxi@umich.edu In recent years, there has been a debate on whether emission taxes should be imposed at the points of production or directly at points of consumption. We investigate this important issue through a system that integrates tax mechanism design decision of the policy maker, with the production, pricing, and emission reduction decisions of a manufacturer, as well as the price sensitivity and demand uncertainty of consumers. 4 - Incentives And Emission Responsibility Allocation In Supply Chains Sanjith Gopalakrishnan, University of British Columbia, Vancouver, BC, Canada, sanjith.gopalakrishnan@sauder.ubc.ca, Daniel Granot, Frieda Granot, Greys Sosic, Hailong Cui Given an assignment, by a dominant supply chain leader, for direct and indirect responsibilities of GHG emissions to the various firms in a supply chain, we adopt cooperative game theory to derive a responsibility allocation, which is the Shapley value of an associated cooperative game. It satisfies several desirable properties - (i) it is easy to compute, (ii) it is uniquely characterized by some compelling axioms, and (iii) among all footprint balanced allocations, it incentivizes firms to exert abatement efforts that minimize the maximum deviation from the socially optimal pollution level. MB30 202B-MCC Sustainable Supply Chains Sponsored: Manufacturing & Service Oper Mgmt Sponsored Session Chair: Vishal Agrawal, Georgetown University, 37th and O Streets, Washington, DC, 20057, United States, Vishal.Agrawal@georgetown.edu 1 - An Analysis Of Recycled Content Claims Under Demand Benefit And Supply Uncertainty Aditya Vedantam, State University of New York at Buffalo, Buffalo, NY, United States, adityave@buffalo.edu, Ananth V Iyer, Paul Lacourbe We investigate the drivers of a manufacturer’s recycled content claim decision under demand benefit for recycled content and uncertainty in municipal supply. Two types of claims are identified - batch specific and batch average. We compare both types of claims and impact on manufacturer profit, recycled input and raw material usage. We parameterize our model to the fiberglass insulation industry and suggest insights.

Fehmi Tanrisever, Bilkent University, Bilkent University, Merkez Kampus Lojmanlari 80/5, Ankara, 06800, Turkey, tanrisever@bilkent.edu.tr, Junchi Tan, Zumbul Atan

We explore the value of downward substitution under stochastically evolving exogenous prices. In particular, we consider a multi-period inventory problem, in which a firm procures two kinds of substitutable inputs to be blended at a certain ratio to produce and sell a final output whose demand and price are uncertain. In this setup, we establish the conditions for the optimality of a base-stock policy and derive the optimal myopic policy for a firm’s procurement and substitution decisions.

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