2016 INFORMS Annual Meeting Program

TD37

INFORMS Nashville – 2016

2 - Optimal Procurement Auctions Under Multi-stage Supplier Qualification Wei Chen, University of Kansas, wei.chen@ku.edu, Milind Dawande, Ganesh Janakiraman We consider a firm that solicits bids from a fixed-sized pool of yet-to-be-qualified suppliers for an indivisible contract. The contract must be awarded to a supplier who passes a multi-stage qualification process. For each stage of the process, the buyer incurs a fixed testing cost for each supplier she chooses to test. Motivated by the buyer’s urgency of time (or the lack of it) for completing the process, we study optimal mechanisms for the buyer under two testing environments: simultaneous testing, where in each stage, the buyer selects a subset of previous- stage-qualified suppliers and tests them simultaneously; and non-simultaneous testing, where simultaneous-testing is not required. 3 - Global Sourcing Under Non-contractible Capacity And Asymmetric Cost Information Ehsan Bolandifar, The Chinese University of Hong Kong, Hong Kong, Hong Kong, ehsan@baf.cuhk.edu.hk, Fuqiang Zhang, Tianjun Feng This paper studies a global sourcing problem where a buyer sources a product from a supplier to satisfy uncertain market demand. The buyer faces two issues when designing the sourcing contract: the supplier’s cost structure is private information and the supplier’s capacity investment is not contractible. We show that the presence of moral hazard does not necessarily lead to a lower profit for the buyer, but it may require a more complex contract format. We find that a single, linear contract could be optimal for the buyer under certain conditions. Even when such a contract is suboptimal, it can deliver close-to-optimal profit for the buyer for a wide range of situations. 4 - Screening Product Quality With Service Contracts Dong Li, Singapore University of Technology and Design, Singapore, Singapore, lidong1107@gmail.com, Nishant Mishra, Serguei Netessine We study contracting for product support under information asymmetry. Product reliability is privately informed for the customer, and the supplier then designs mechanisms to achieve screening product failure rates. We investigate the screening effects of two types of service agreement: Performance-based Contracts (PBC) and Transaction-based Contracts (TBC). Despite the advantages of PBC highlighted in previous studies, we find that TBC may have a lower screening cost than PBC when the customer has high levels of reserved utility. Our model provides theoretical supports for co-existence of multiple contract forms in product repair and maintenance outsourcing. TD37 205C-MCC Investment in Renewable Energy and Energy Efficiency Sponsored: Manufacturing & Service Oper Mgmt, Sustainable Operations Sponsored Session Chair: Safak Yucel, Duke University, 100 Fuqua Drive, Durham, NC, 27705, United States, safak.yucel@duke.edu 1 - The Impact Of Carbon Pricing On Improving Supply Chain Energy Efficiency Quang Dang Nguyen, University of Minnesota, nguy1762@umn.edu, Karen Donohue, Mili Mehrotra We study the impact of a carbon pricing policy and its accompany on the energy efficiency investment decisions of a small manufacturing supplier facing competition for the business from a large industrial buyer. We also derive the optimal strategy for policy maker and the resulting social welfare, taking into consideration the social and environmental externalities of the supplier’s operations. 2 - Quantifying The Impact Of Intermittent Renewable Generation On German Electricity Market Shadi Goodarzi, HEC Paris, shadi.goodarzi@hec.edu Shadi Goodarzi, California State University Fullerton, Fullerton, CA, United States, shadi.goodarzi@hec.edu, Derek W Bunn, Syed Basher How does the penetration of renewable energy affect electricity market? Using high frequency 15-minute interval data, we quantify the impact of wind and solar production forecast errors on intraday electricity market equilibrium in Germany. We find, among others, higher wind and solar production forecast errors decrease the spot price and supply-demand imbalance.

3 - Designing Hydro Supply Chains For Water, Food, Energy And Flood Nexus Kwon Gi Mun, Assistant Professor, Fairleigh Dickinson University, 1000 River Rd. H-DH2-06, Teaneck, NJ, 07666-1914, United States, kgmun@fdu.edu, Raza Ali Rafique, Yao Zhao We study the nexus of water, food, energy and flood, which are among the most formidable challenges faced by developing countries around the world. The development of hydropower has the potential to address all these issues in the same time and thus is prioritized in the international community to reduce poverty, promote the sustainable development of the economy, and achieve the Millennium Development Goals. We apply the SCM concept to water resource development and provide the end-to-end and dynamic perspectives (the supply chain perspectives) needed in the expansion of hydropower network for energy security, irrigation and flood control. 4 - Reversing The Death Spiral: A New Business Model For Utility Firms Under Social Network Effects Safak Yucel, Georgetown University, Washington, DC, United States, safak.yucel@georgetown.edu, Gurhan Kok, Kevin Shang Utility death spiral describes a phenomenon in which retail electricity prices increase as more consumers invest in residential rooftop solar panels. In this paper, we present a technology-adoption model and show that this phenomenon occurs because of the current net metering policy, which allows consumers to sell their excess electricity back to utility firms. We then study several new business models that aim to counteract the death spiral phenomenon. Service Science I Contributed Session Chair: Sreekanth V K, Research Scholar, Indian Institute of Technology Kharagpur, Kharagpur, 721302, India, sreekanthvettikkadu@iitkgp.ac.in 1 - Impact Of Staffing Flexibility On Unit Climate And Patient Safety In Hospitals Adelina Gnanlet, Associate Professor, California State University- Fullerton, 800 N State College Blvd, Department of Management, Fullerton, CA, 92831, United States, agnanlet@fullerton.edu, Chris McDermott, Rommel O Salvador Floating, the frequent use of flexible staff, is typically associated with the benefits of scheduling ease and lowered costs but results in work interruption and discontinuity of patient care in hospitals. Therefore, higher floating can lead to deterioration of staff unit climate and patient safety. Using unit-level data from hospitals, we find that floating more than 8hrs negatively impacts patient safety, with unit climate mediating the relationship between floating and patient safety. 2 - Two New History-based Delay Predictors For Call Centers Wyean Chan, Universite de Montreal, DIRO Pavillon Andre- Aisenstadt, CP 6128 succ Centre-Ville, Montreal, QC, H3C 3J7, Canada, chanwyea@iro.umontreal.ca, Mamadou Thiongane, Pierre L’Ecuyer We propose two predictors to estimate the delay of customers in call centers or similar service systems. The first method predicts the delay by extrapolating the wait history of customers currently in queue. The second predictor uses an exponential smoothing of the delays of past customers conditional to the queue length. These predictors are attractive in practice because they are simple to implement, they require very few parameters and basically no optimization. 3 - Designing Service Machine For Emergency Medical Services Sreekanth V K, Research Scholar, Indian Institute of Technology Kharagpur, Kharagpur, 721302, India, sreekanthvettikkadu@iitkgp.ac.in, Ram Babu Roy, Paul M Lillrank Service machine is a metaphorical concept used in Translational Systems Sciences to explore the possibilities of applying machine design principles to the design of service production systems. The design of a service machine needs to consider several constraints arising from the nature of services: immateriality of the offering, heterogeneity of demand, inseparability of the production process, and perishability of resources. The customer behavior must be incorporated in the design as the service value is realized through co-creation by customers and producers. This research proposes an application of service machine concept for designing emergency medical services in Indian context. TD38 206A-MCC

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