2016 INFORMS Annual Meeting Program

TA37

INFORMS Nashville – 2016

3 - Service Systems With Coarse Priorities: The Social Cost Of Revenue Maximization Martin Lariviere, Northwestern University, 2001 Sheridan Rd, Evanston, IL, 60208, United States, m-lariviere@kellogg.northwestern.edu, Itai Gurvich, Can Ozkan We consider how social maximization differs from revenue maximization in a queuing system in which a continuum of customer types is mapped to a finite number of priority classes. The decision maker controls coverage (how many customers to serve), coarseness (how many priority levels to offer), and classification (how types are assigned to classes). We show that both types of decision makers provide similar coverage and coarseness. They differ in how they split customers between classes. Relative to the social planner, the revenue maximizer may have the highest priority class over- or undersubscribed depending on the behavior of the distribution of customer values. 4 - Learning In Online Matching Platforms: Multi-armed Bandits With Capacity Constraints Vijay Kamble, Stanford University, Stanford, CA, 9, United States, vijaykamble.iitkgp@gmail.com We consider the interaction between two central operational challenges for almost any matching platform: on the one hand, new users are continuously arriving, and the platform’s goal is to learn the attributes of these users quickly enough to ensure satisfactory matches. On the other hand, learning these attributes typically requires experimenting with matches and observing the outcomes, which is difficult since the supply of entities to be matched to is limited. In this paper we address the correct balance between these activities in such two-sided matching platforms, in the presence of supply constraints. Operations and Supply Chains for Innovative Goods Sponsored: Manufacturing & Service Oper Mgmt, Supply Chain Sponsored Session Chair: Robert Swinney, Duke University, Durham, NC, United States, robert.swinney@duke.edu 1 - Promoting Innovative Technology In Developing Countries Through Solution-based Contracts Limited knowledge and lack of proper skills make potential users reluctant to purchase innovative technology, e.g., drip irrigation systems, even though it can improve yields incredibly. We show that through solution-based service, firms can help farmers, especially in developing countries, overcome the above knowledge barrier of using the technology, thus leading to higher market adoption and profitability. Besides, a yield-based payment structure can facilitate efficient financial cost saving when farmers face financial constraint, and hence incentivises farmers’ adoption further more. 2 - Designing Supply Chains For Substitutable Digital And Physical Goods Zhenhuan Lei, Duke University, zhenhuan.lei@duke.edu, Robert Swinney We consider a firm selling two partially substitutable goods, one digital and one physical, e.g., a downloadable and DVD version of the same movie. The physical good is characterized by non-zero marginal production cost, positive production leadtime, and, potentially, a mismatch between supply and demand. The digital good is characterized by zero marginal cost and no inventory constraints. We consider how market and product characteristics drive the firm to price each product, determine inventory, choose a selling strategy involving one or both goods, and design its supply chain. 3 - Dynamic Stimulus In Crowdfunding Longyuan Du, University of Toronto, Toronto, ON, Canada, Longyuan.Du14@rotman.utoronto.ca, Ming Hu, Jiahua Wu We study the dynamics of online crowdfunding in which a campaign would fail unless a predetermined funding goal is achieved within a given duration. We demonstrate empirically using KickStarter data the significant benefit of dynamically offering stimulus. Motivated by the empirical results, we build a theoretical model to analyze several policies, such as seeding, feature upgrade and promotional discount, and provide the optimal timing of stimulus offerings depending on time- and pledge-to-go. We then illustrate the stimulus policies’ benefits using failed projects from Kickstarter. Guangrui Ma, Tianjin University, Tianjin, China, magr@connect.ust.hk, Ying-Ju Chen, Hau Leung Lee TA36 205B-MCC

4 - Food Wastage In Commercial Kitchens Varun Karamshetty, INSEAD, Fontainebleau, 77300, France, varun.karamshetty@insead.edu, Elena Belavina, Karan Girotra Kitchens are wasting as much on food waste as they make in profits. With an estimated $1 trillion in food being wasted every year, food waste is not only a huge economic loss, but also has a major impact on our environment accounting for nearly 15% of global GHG emissions. We analyze proprietary data to understand key drivers of food wastage in commercial kitchens. We identify the controllable factors, and quantify the impact of each of them. We then propose changes in their operations that minimize wastage while maintaining their service quality and bottom-line. TA37 205C-MCC Sustainability Issues in Supply Chains I Sponsored: Manufacturing & Service Oper Mgmt, Sustainable Operations Sponsored Session Chair: Saed Alizamir, Yale University, 165 Whitney Ave, New Haven, CT, 06511, United States, saed.alizamir@yale.edu 1 - Should Brands Tighten Certification Standards Li Chen, Cornell University, Ithaca, NY, United States, li.chen@cornell.edu, Shiqing Yao, Kaijie Zhu Global brands are increasingly relying on third-party certification to screen out low-quality suppliers. However, an unethical certifier may collude with a low- quality supplier to produce a false certification. In this study, we investigate the buyer’s equilibrium strategy in setting certification standard under the risk of supplier-certifier collusion. 2 - Can Brands Claim Ignorance? Unauthorized Subcontracting In Apparel Supply Chains Anna Saez de Tejada Cuenca, PhD Student, UCLA Anderson School of Management, Los Angeles, CA, United States, anna.sdtc.1@anderson.ucla.edu, Felipe Caro The collapse of the Rana Plaza building in Bangladesh brought into focus the poor safety conditions faced by many workers in the apparel industry. A common way in which safety and environmental standards are violated is through unauthorized subcontracting. We analyze empirically some factors that can lead suppliers to outsource their production to third parties without their retailers’ knowledge. We use data provided by a supply chain manager that consists of over 30,000 orders, including 36% of subcontracted ones. Our results provide managerial insights to retailers on what factory and order characteristics increase the probability of unauthorized subcontracting, and how it can be prevented. 3 - Optimal Production Planing In Agricultural Supply Chains Utku Serhatli, PhD Student, INSEAD, Constance de le Boulevard, Fontainebleau, 77590, France, utku.serhatli@insead.edu, Enver Yucesan, Andre Du Pin Calmon We model the production decisions of a corn seed manufacturer who faces supply and demand uncertainties, product returns, and quality problems over a finite horizon. More specifically, we build an N-period model to capture the inherent complexities and solve the two-period scenario where we prove the optimality of a base stock policy and show the impact of operational agility on profit. We also investigate the impact of yield variability and return rates on the optimal production quantities. We complement our theory using numerical results with data from a major European agro-chemical company. 4 - Managing A Responsible Supply Chain Under Threat Of Public Disclosure Saed Alizamir, Yale University, saed.alizamir@yale.edu, Sang Kim We analyze a game-theoretic model in which a downstream supply chain member (“buyer”) is penalized disproportionately due to a compliance violation by an upstream member (“supplier”). Buyer’s ability to audit the supplier is limited, and she faces a risk of being publicly blamed after the supplier’s violation is caught by a third party. Supplier exerts effort to enhance compliance in each period, but risks having his relationship terminated due to a stochastic compliance outcome.

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