2016 INFORMS Annual Meeting Program

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INFORMS Nashville – 2016

WA47 209C-MCC New Models for Pricing and Assortment Optimization Sponsored: Revenue Management & Pricing Sponsored Session Chair: Adam Nabil Elmachtoub, Columbia University, 500 W 120th St., New York, NY, 10027, United States, adam@ieor.columbia.edu 1 - Assortment Optimization And Pricing Under A Nonparametric Tree Choice Model Jake Feldman, U Washington, jbf232@cornell.edu We consider assortment and pricing problems under a nonparametric ranking- based choice model. Under this nonparametric choice model, each customer class is distinguished by a unique ranking of the available products and an arrival probability. Given the arrival of a customer from a particular customer class, this customer will purchase the highest ranking offered product in her respective ranking list. First, we study assortment problems, where the goal is to find a set of products to offer so as to maximize the expected revenue from each customer. Second, we study the joint assortment and pricing problem, where the goal is to simultaneously select the set of products to offer as well as their prices. 2 - Revenue Management By Strategic Customer Selection Roger D Lederman, IBM, rlederman@gmail.com, Vineet Goyal, Adam Elmachtoub We describe a framework for managing product transitions, including the role that sales targeting can have in shaping customer decisions, managing inventory, and increasing revenue. We provide algorithms that select customers dynamically, each with their own choice model, in order to maximize revenue from a limited supply of inventory. We propose constant factor approximations when assortments may be chosen dynamically, and for a constrained setting where the set of offered products can only decrease over time. 3 - The Price Of Opacity Michael Hamilton, Columbia, mh3461@columbia.edu In this work, we study the value of selling opaque products, i.e., products where some features are hidden from the customer until after purchase. Opaque selling has seen use in airline and hotel contexts as well as by online retailing companies such as on Amazon and Threadless. Opaque selling allows for price discrimination between customers with strong or weak preferences among products. We study the impact of this discrimination and compare the revenue garnered against traditional selling strategies. We theoretically show that the revenue increase from opaque selling, which we call “The price of opacity”, can be considerable in a number of contexts that we explore. 210-MCC Interdisciplinary Business Analytics Invited: Social Media Analytics Invited Session Chair: Mingfei Li, Bentley University, Waltham, MA, 02452, United States, mli@bentley.edu Co-Chair: David Oury, Bentley University, 175 Forest Street, Waltham, MA, 02451, United States, doury@bentley.edu 1 - Role Of Collaborative Consumption Factors: A Cross-national Case Of Airbnb Funda Sarican, Bentley University, fsarican@bentley.edu With the rise of social platforms consumers recreated value by sharing resources. As a result, there has been an increase in collaborative consumption. To contribute to a better understanding of this phenomenon I focused on the peer- to-peer travel accommodation service Airbnb. The value of my research lies in identifying meaningful factors; product, social, cultural, and economic that have been studied in relation to the price or economy in previous literature. 2 - Health Analytics On The Quality And Efficiency Of Clinical Practice On Several Major Cancers Chao Wang, Bentley University, cwang@bentley.edu Cancer treatment has been a hot topic for healthcare domain for quite a long time. Efficiency and quality of the cancer treatment has been accessed from the medical point of view for past decades. However, for this study, HCUP state level inpatient data would be used to evaluate the changes of the quality and efficiency of major cancers’ treatment in hospital care. WA48

3 - Socio-economic Perceptions In Emerging Markets Fernanda Maciel, Bentley University, Waltham, MA, United States, fmaciel@bentley.edu In recent years, citizens in emerging economies are reporting higher levels of satisfaction with their living conditions and demonstrating high optimism about future perspectives compared to people in advanced economies in self-reported well-being surveys. This paper investigates the convergence of the socio-economic perceptions in emerging markets over time, tracking statistical clustering and movement of these countries using self-organizing maps (SOMs). 4 - Diversification Of Risk Management Strategies Olga Biedova, Bentley University, obiedova@bentley.edu Diversification of risk management strategies allows to achieve a well-balanced risk-return profile, which surpasses the profile of an approach of simple asset diversification. We present the results of numerical simulations of two conceptually different risk management techniques: a dynamically risk-managed fund and a guarantee structure linked to capital markets, which can be often seen in indexed Variable Annuity or Fixed Indexed Annuity. We show how these techniques would have worked in the past and compare their performance to a more traditional balanced portfolio with 60% equity and 40% bond without risk management. 211-MCC Strategic Behavior, Competition, and Coordination under Uncertainty Sponsored: Revenue Management & Pricing Sponsored Session Chair: Sila Cetinkaya, Southern Methodist University, 3145 Dyer street, Dallas, TX, 75205, United States, sila@smu.edu Co-Chair: Olga Bountali, Southern Methodist University, 3145 Dyer street, Dallas, TX, 75205, United States, obountali@smu.edu 1 - The Impact Of Batch Services On Customers’ Equilibrium Actions And On Social Welfare Olga Bountali, Southern Methodist University, obountali@smu.edu, Antonis Economou We consider a single-server batch service queue and investigate the equilibrium behavior of customers when they strategically decide whether to join the system or not, driven by maximizing their own revenue. Usually congestion forms a discouraging factor for joining, as it is associated with long waiting. In batch- service systems, however, it induces both positive and negative externalities to customers’ decisions. This leads to an intricate mixture of Avoid The Crowd and Follow The Crowd behavior. Consequently, it is not clear whether it becomes socially beneficial to incite customers to join or not. We shed light on these topics and investigate ways to regulate the queue. 2 - Price And Lead-time Competition With Customer Choice Philipp Afèche, Rotman School of Management, University of Toronto, Toronto, ON, Canada, afeche@rotman.utoronto.ca We consider the price/lead-time design problem of capacity-constrained providers that compete for heterogeneous price- and time-sensitive customers with private information on their preferences. We model the problem as a queueing game and discuss how the equilibrium properties depend on the capacity and the demand characteristics. 3 - The Impact Of Inspection Cost On Equilibrium, Revenue And Social Welfare In A Single Server Queue Classical models of customer decision making in unobservable queues assume it is too costly to acquire queue length information. However, various services now make this kind of information accessible to customers at a reasonable cost. In our model customers choose among three options: join the queue, balk, or inspect the queue length at a cost before deciding whether or not to join. We map all possible input parameter sets into three scenarios. Each scenario is characterized by a different impact of inspection cost on both equilibrium and revenue maximization queue disclosure policy: fully observable, fully unobservable, or observable by demand (when inspection cost is at an intermediate level). WA49 Ricky Roet-Green, Simon Business School, University of Rochester, CS 3-345, Rochester, NY, 14627, United States, ricky.roet-green@simon.rochester.edu, Refael Hassin

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