2016 INFORMS Annual Meeting Program

WC73

INFORMS Nashville – 2016

WC72 Bass- Omni Supply Chain Mgt XV Contributed Session

3 - Revenue Management In Synchromodal Container Transportation Rommert Dekker, Professor of Quantitative Logistics, Erasmus

University-Rotterdam, Burg. Oudlaan 50, Po Box 1738, Rotterdam, 3000 DR, Netherlands, rdekker@ese.eur.nl, Bart Riessen

In order to obtain a balanced cargo load in time, booking classes are introduced for hinterland intermodal container transport. We consider the case of two classes and two destinations. The first class of containers is transported the same day, while the second class can be delayed one day. We use daily booking limits to control the demand for both classes, while demand outside the classes is trucked to the destination which is more expensive. Using Markov chains we determine expected costs for each pair of limits and determine the optimal ones. We show the application of the model using a real case. 4 - Loss Aversion And Subsidy Design In Bot Road Projects Yiwen Zhang, Tianjin University, 92 Weijin Rd, Nankai District, Tianjin, P.R., 300072, China, zhangyiwen@tju.edu.cn, Shuibo Zhang, Zhuo Feng Government subsidy plays an important role in attracting private investors in BOT projects. Previous studies only consider the material surplus of the government and the private sector with their psychological losses ignored. As a result, an inappropriate subsidy design may be proposed that prevents efficient renegotiation afterwards. In this paper, by taking the initial subsidy design as the reference point and considering loss aversion of both the government and the private sector, we investigate the optimal government subsidy to maximize social surplus in the whole concession period. This project provides decision support for the government in designing the optimal government subsidy. 5 - Optimizing Daily Service Routes For Major Grocery Chains Luis J. Novoa, The George Washington University, 2201 G Street, NW, Funger Hall, Washington, DC, 20052, United States, ljnovoa@gwu.edu, Ahmad I Jarrah, Jonathan F Bard, Sifeng Lin, Xinhui Zhang We develop a customized column generation algorithm to solve industrial-scale instances of a retail route design problem. This problem extends the capacitated vehicle routing problem with time windows by including order loading constraints, order-dependent vehicle capacity, material handling at the warehouse, time limits and idle time costing. Routes are iteratively generated by solving parallel dynamic programs which implement novel efficiency procedures. Considerable cost reductions are found when evaluating against current solutions from a major grocery chain. Game Theory III Contributed Session Chair: Ying Zhang, University of North Carolina-Chapel Hill, 116 Saint Andrews Ln., Chapel Hill, NC, 27517, United States, Ying_Zhang@kenan-flagler.unc.edu 1 - Applicability Of The Proportional Nucleolus In Cooperative Games Based Highway Cost Allocation Saurav Kumar Dubey, PhD Student, University of Tennessee, 1615 Laurel Avenue, Box 203, Knoxville, TN, 37916, United States, skumardu@vols.utk.edu, Alberto Garcia-Diaz A highway cost allocation (HCA) problem is formulated as a Least-Core model with Aumann-Shapley Values defining the characteristic function of the game. For such a game, the nucleolus offers a unique and stable solution. However, the nucleolus concept is non-monotonic because any marginal increase in total highway cost is distributed unevenly among vehicle classes. A derivative of the least-core model, known as Proportional Nucleolus, and known to be unique and monotonic will be considered. 2 - Locating Warehouse In An Emerging Country A Win Win Proposition Ying Zhang, University of North Carolina-Chapel Hill, 116 Saint Andrews Ln., Chapel Hill, NC, 27517, United States, Ying_Zhang@kenan-flagler.unc.edu, Jayashankar M Swaminathan We investigate the trend of warehouse outsourcing in offshore business where a retailer in a developed country sources from a supplier in an emerging country. The retailer can deliver products directly to the developed country or use a warehouse in the emerging country to hold second-tier safety stock. The supplier and the retailer negotiate over the wholesale price and batch size conditional on the retailer’s warehouse outsourcing decision. We explore when the retailer prefers the emerging-country warehouse and show that the emerging-country warehouse can be beneficial even without cost advantage. WC71 Electric- Omni

Chair: Ping Su, Assistant Professor, Hofstra University, Frank Zarb School of Business, Hofstra University, Hempstead, NY, 11549, United States, Ping.Su@hofstra.edu 1 - Towards Supply Chain Information Flow Theory Abdurrezzak Sener, PhD Student, Wichita State University, 1845 Fairmount St, Wichita, KS, 67260, United States, axsener@wichita.edu, Mehmet Barut, Mehmet B Yildirim Information sharing and coupling have been interest of researchers for decades. Empirical studies focused to understand the impact of information sharing to operational and organizational performance. A few studies focused on developing integration matrices to measure coupling. In this study we are taking initiative steps towards developing information flow theory. 2 - Debt Financing And Supply Chain Competition Ping Su, Assistant Professor, Hofstra University, Frank Zarb School Existing literature has concluded that debt financing causes two firms that engage in a Cournot game to compete more aggressively, each expanding its product supply level. However, both firms are worse off than if they are purely equity financed, resulting in the so-called prisoner’s dilemma. Introducing two supply chain structures, distributional and parallel, we examine whether this prisoner dilemma persists if the firms’ upstream could influence their competition. We find that the answer is positive because the upstream benefits from the intensified downstream competition. Moreover, the supply expansion effect varies in different supply chain structures. of Business, Hofstra University, Hempstead, NY, 11549, United States, Ping.Su@hofstra.edu, Joice (Qiaohai) Hu Secil Savasaneril, Associate Professor, Middle East Technical University, Orta Dogu Teknik Universitesi End. Muhendisligi, Dumlupinar Bulvari No:1, Dumlupinar Bulvari No:1, 06800, Turkey, ssecil@metu.edu.tr, Nursen Tore We study how seller (producer or retailer) sets inventory and price in the presence of customer driven substitution. We assume the seller can affect the substitution behavior by price and availability of the products. Demand for each product is stochastic, and spills over due to cross-price effects. If one product stocks out then this also results in spillovers to the other product. The products are sold in two periods, where in the second, seller may markdown price to exploit stockout based substitution. We determine optimal stock levels, initial and markdown prices. Then, through numerical analysis, we quantify the value of exploiting price- and stockout-based substitution. 2 - Mechanism Design With Heterogeneous Agent Demand Profiles: Applications To Carbon Capture And Storage(ccs) Wenbo (Selina) Cai, New Jersey Institute of Tech, Mec 308, University Heights, Newark, NJ, 07102, United States, cai@njit.edu, Dashi Singham Classic mechanism design problems optimize contracts offered to different types of agents, where the agents have private information on some of their characteristics, such as demand. We consider heterogenous agent demand distribution profiles and apply our results to analyzing contracts for carbon capture and storage systems, where the demand of emissions sources for transporting and storing carbon varies based on the type of emitter, and each type having its own distribution of emissions month to month. WC73 Legends A- Omni Operations Management VII Contributed Session 1 - Seller Response To Customer-driven Substitution

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