2016 INFORMS Annual Meeting Program

WB37

INFORMS Nashville – 2016

3 - Price Discrimination In a Regulated Healthcare Market: Role Of Government Subsidy And Price Cap Jianpei Wen, Peking University, Founder Building, No.298 ChengFu Rd, HaiDian District., Beijing, 100871, China, wenjianpei@pku.edu.cn, Frank Y Chen, Jie Song The long waiting times in the public health sector in many countries has motivated the government to shift health authority waiting lists to the private sector, by setting a price cap and subsidizing switching patients in private services. We propose a novel queuing model incorporating choice behavior of heterogeneous time-sensitive customers. The optimal pricing policy with price discrimination to maximize the private sectors’ revenue will exam the effect of subsidy and price cap in a government regulated market. 4 - A Reservation Policy For Medical Diagnostic Resource Allocation Weifen Zhuang, Xiamen University, wfzhuang@xmu.edu.cn We study the problem of the resource allocation of medical diagnostic facilities, accessed by three types of patients. Both inpatients and outpatients have to make appointments in advance, and emergency patients walk in directly. We formulate a dynamic programming model of the resource allocation problem and study the structural properties, based on which we fully characterize the optimal reservation policy. An upper bound and a lower bound to the DP value are created and proved to be asymptotically optimal. Numerical studies show that the performance of bounds works very well, and our heuristic policy outperforms the hospital’s target policy significantly. WB36 205B-MCC Supply Chain Analytics Sponsored: Manufacturing & Service Oper Mgmt, Supply Chain Sponsored Session Chair: A Serdar Simsek, University of Texas-Dallas, 800 W. Campbell Rd, SM 30, Richardson, TX, 75080, United States, serdar.simsek@utdallas.edu 1 - Dynamic Selling Mechanisms For Exploring Markets With Customer- And Time-heterogeneity problem in a setting where a firm can dynamically optimize its prices. 2 - Consumer Choice Models With Endogenous Network Effects Ruxian Wang, Johns Hopkins Carey Business School, Baltimore, MD, 21202, United States, ruxian.wang@jhu.edu, Zizhuo Wang Network externality arises when the utility of a product depends not only on its attributes, but also on the number of consumers who purchase the same product. We first characterize the choice probabilities under such models and conduct studies on comparative statics. Then, we show that a new class of assortments, called quasi-revenue-ordered assortments, which consist of a revenue-ordered assortment plus at most one additional item, are optimal under mild conditions. An empirical study on a mobile game dataset shows that our proposed model can provide better fits for the data, increase the prediction accuracy for consumer choices and potentially increase revenue. 3 - Two Echelon Distribution Systems With Random Demands And Storage Constraints The Multi-product Case Awi Federgruen, Columbia University, af7@columbia.edu, Daniel Guetta, Garud N Iyengar We address a general model for a two-echelon system with arbitrarily many retailers and products, joint storage constraints and joint order costs.. We develop an approach to compute a tractable lower bound dynamic program (DP) for the optimal system-wide costs, along with a novel order, withdrawal and allocation policy that is derived from the strategy which is optimal in the lower bound DP. The lower bounds are based on a combination of relaxation methods, Lagrangian and others. Based on an extensive numerical study, the lower bound is found to be very accurate, and the proposed system-wide policy is close to optimal. We also show how the model can be used to make strategic, e.g., assortment decisions. Meng Li, University of Massachusetts, Dartmouth, MA, United States, meng.li@umassd.edu, N. Bora Keskin Consumers are often heterogeneous in their preferences for product quality, and firms usually face uncertainty about consumer preferences when they sell vertically differentiated products to such heterogeneous consumers. We study this

4 - An Expectation-maximization Algorithm To Estimate The Parameters Of The Markov Chain Choice Model A Serdar Simsek, The University of Texas at Dallas, Naveen Jindal School of Management, 800 W Campbell Road, Richardson, TX, 75080, United States, serdar.simsek@utdallas.edu, Huseyin Topaloglu We develop an expectation-maximization algorithm to estimate the parameters of the Markov chain choice model. The parameters of the Markov chain choice model are the probability that the customer arrives into the system to purchase each one of the products and the probability that she transitions from the current product to another one for each pair of products. We give computational experiments on multiple data sets, one of which uses real hotel data from the literature. Markov chain choice model, coupled with our expectation- maximization algorithm, yields better predictions of customer choice behavior when compared with other commonly used alternatives. WB37 205C-MCC Supply Chain Structure and Sustainability Sponsored: Manufacturing & Service Oper Mgmt, Sustainable Operations Sponsored Session Chair: Greys Sosic, University of Southern California, Los Angeles, CA, United States, sosic@marshall.usc.edu Co-Chair: Hailong Cui, Marshall School of Business, University of Southern California, CA, United States, Hailong.Cui.2019@marshall.usc.edu 1 - Ensuring Corporate Social And Environmental Responsibility Through Vertical Integration And Horizontal Sourcing Adem Orsdemir, University of California Riverside, adem.orsdemir@ucr.edu, Bin Hu, Vinayak V Deshpande Inspired by Taylor Guitars’ vertical integration with its supplier to ensure corporate social and environmental responsibility (CSER), we investigate vertical integration as an alternative strategy for ensuring CSER in a competitive setting. We find that demand externality due to violation exposures and the possibility of supplying the competitor may fundamentally change firms’ behaviors and CSER outcome. Furthermore, we find that high probability of violation exposure may discourage responsible sourcing under strongly negative demand externalities. Our findings suggest guidelines for firms interested in ensuring CSER, and for NGOs’ violation scrutiny and reporting policies. 2 - Peer-to-peer Product Sharing: Implications For Ownership, Usage, And Social Welfare Guangwen Kong, University of Minnesota, 111 Church Street, Minneapolis, MN, 55455, United States, gkong@umn.edu, Saif Benjaafar, Xiang Li We consider a two-sided market consisting of product owners and renters, mediated by an online platform. Individuals decide on whether to be owners or renters. Owners are able to generate income from renting their products to non- owners while non-owners are able to access these products through renting on as needed basis. The platform decides on rental prices, commission rates, and membership fees. We characterize equilibrium outcome and compare product ownership and product usage with and without sharing. 3 - Capacity Allocation For A Green Farm Much of the farmland in the United States is leased to farmers by landlords through a crop-sharing agreements. Consumers are willing to pay a premium for green produce and some even more for locally sourced green produce. However, yields for green farming are typically lower than conventional farming. We model the strategic interaction between a farmer and a landlord, the capacity allocation decision of the farm across conventional and green produce, and the decision of the farm to allocate its green produce across a global market and a local market under a crop-sharing agreement. 4 - Design Of Public Warning System Saed Alizamir, Yale University, saed.alizamir@yale.edu, Francis E De Vericourt, Shouqiang Wang We study the design of public warning systems in a multi-period model. In each period, the sender (she) receives an imperfect signal about the true state of the world (dangerous or safe), and has to decide whether to warn the receiver to act. Depending on the true realization of the random event, the receiver updates his belief about sender’s credibility. The sender, therefore, has to dynamically manage her reputation over time, while also incentivizing the receiver to act on her warnings. We characterize the optimal warning policy, and gain insights into why it may sometimes be optimal for the sender to distort her signal. Dong Li, Singapore University of Technology and Design, Singapore, Singapore, dong_li@sutd.edu.sg, Saif Benjaafar, Niyazi Taneri

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