2016 INFORMS Annual Meeting Program

SB56

INFORMS Nashville – 2016

3 - Robust Transmission Planning Under Uncertain Generation Investment And Retirement Lizhi Wang, Iowa State University, lzwang@iastate.edu, Bokan Chen We present a new robust optimization model for transmission planning. This model considers the addition of new renewable generation and the retirement of existing generation capacity as sources of uncertainty, anticipates for each transmission plan the worst scenario that would result in the highest investment and operational cost, and identifies the most robust transmission plan with the least costly worst case scenario. We demonstrate this approach with a case study on the WECC 240-bus test system. Results will be illustrated with novel quantification and visualization techniques. 4 - Data-driven Stochastic Unit Commitment For Integrating Wind Generation Chaoyue Zhao, Oklahoma State University, chaoyue.zhao@okstate.edu In this talk, we propose a data-driven risk-averse stochastic unit commitment model, where risk aversion stems from the worst-case probability distribution of the renewable energy generation amount, and develop the corresponding solution methods to solve the problem. Given a set of historical data, our proposed approach constructs a confidence set for the distributions of the uncertain parameters using statistical inference and solves the corresponding risk- averse stochastic unit commitment problem. The computational results numerically show how the risk-averse stochastic unit commitment problem converges to the risk-neutral one, which indicates the value of data. SB56 Music Row 4- Omni Analytical Models in E-business Sponsored: E-Business Sponsored Session Chair: Yonghua Ji, University of Alberta, School of Business, Edmonton, AB, T6G2R6, Canada, yji@ualberta.ca 1 - Announcing Privacy Threshold In Mobile Platform Competition Zixuan Meng, University of Washington, zxmeng@uw.edu Smartphones are increasingly necessary for everyday life and consumers find it important to prevent from privacy violations through Apps on mobiles. Android and iOS, two of the most popular App platforms, are different in App privacy levels. IOS, known to have a higher privacy level, chooses to make privacy requirement public. Using vertical differentiation model, we find that when market is fully covered, publicizing privacy threshold motivates both firms lowering privacy level. This helps both firms generate more profit by hurting consumers. This finding contradicts with common belief and calls for awareness of potential harm from a policy that seems protective to consumers. 2 - How Much To Open, How Fast To Fix And Develop? Impacts Of Openness On Software Development And Maintenance Rakesh R Mallipeddi, Texas A&M University, College Station, TX, 77840, United States, rmallipeddi@mays.tamu.edu Emre Muzaffer Demirezen, Ram Gopal, Subodha Kumar Proprietary software vendors have recently begun to emulate the open source software community in opening up part of their software. We analyze the impact of software openness in the context of resource allocation between bug fixing and new version development, an important operations issue that many software vendors face in light of prevalence of software defects. We formulate optimal control models to examine the effects of making the software code open (fully or partially) on the overall quality of the software and the development efforts of its next version. 3 - Crowdfunding Mechanism Design And Its Effect On Fundraising Aravinda Garimella, University of Washington, aravinda.garimella@gmail.com Our study examines how entrepreneurs’ choices of Funding Type and Rewards Types jointly impact the outcome of crowdfunding campaigns. We begin by providing a conceptual framework that distinguishes between Mechanism and Non-Mechanism aspects of campaign design. We then focus on two mechanisms at play in Reward-Based Crowdfunding platforms. First, entrepreneurs may opt for one of two Funding Types, Fixed Funding or Flexible Funding. Second, entrepreneurs are also heterogeneous in the mix of Reward Types they choose to offer to their backers. Using a rich data set of daily funding information on Indiegogo, we study how these two mechanisms influence funding outcomes and trajectories.

4 - Dynamics And Efficiency Of a Mobile Platform Ruibing Wang, University of Science and Technology of China, Hefei, China, ruibing@mail.ustc.edu.cn, Qinglong Gou, Yonghua Ji A mobile platform serves as a multi-sided market which connects users, app developers and advertisers. Different from the traditional multi-sided market, the cross-side network effects between different groups are different. It makes the decision process on advertising investments of platform owners and app developers more challenging. We develop a dynamic model, capturing these impacts, to offer suggestions on their advertisement strategy. We found that platform owners should offer app developers incentives according to the size of their user base or their advertising expenditure. We also Investigate the impact of different kinds of incentive on the system efficiency. SB57 Music Row 5- Omni Behavioral Research on Inventory and Pricing Sponsored: Behavioral Operations Management Sponsored Session Chair: Elena Katok, University of Texas at Dallas, Richardson, TX, United States, ekatok@utdallas.edu 1 - Negotiating Transshipments Prices For Improving Supply Chain Coordination Sebastian Villa, University of Los Andes, Bogotá, Colombia, villabes@usi.ch, Elena Katok When retailers face stochastic demand, it is often beneficial for retailers in the same industry to buy or sell product from one another in order to better match supply and demand. This exchange of product at the retailer level is called transshipment. Appropriate ordering decisions and transshipment prices can improve supply chain coordination. We create some experiments to evaluate how subjects decisions deviate (or not) from the theoretical channel-coordinating benchmarks. Initially, we automate the ordering decision, to evaluate how the transshipment prices are negotiated, and then we evaluate retailers’ decisions when they do both, negotiate transshipment prices and place orders. 2 - Newsvendors’ Decisions Revisited Tobias Stangl, University of Cologne, tobias.stangl@uni-koeln.de Elena Katok, Ulrich Thonemann In our study we revisit most of the proposed explanations for the pull-to-center effect in newsvendor experiments. We conducted an experimental study with 620 students from a core course in operations management. Our newsvendor study comprises two frames and seven critical ratios. In addition we collected data on anchoring, cognitive reflection, overconfidence, and risk aversion. In our data we find no support for assuming that context matters nor for assuming (different) psychological costs of leftovers and stock-outs. We find a risk and gender effect and additional evidence that low cognitive reflection and over-precision increases the pull-to-center effect. 3 - Procurement In The Presence Of Supply Disruptions Elena Katok, University of Texas at Dallas, ekatok@utdallas.edu We consider a setting with a supply disruption that may occur after a contract is negotiated. If the disruption can be corrected at a cost, and it is more efficient for the supplier, rather than for the buyer, to correct the disruption, a contract that does not include the disruption contingency leads to inefficient outcome. We examine the effect of communication and the ability to renegotiate in the laboratory. The main finding is that informal commitments improve efficiency a great deal. 4 - Profit-sharing Or Target-with-bonus? A Behavioral Investigation

Kay-Yut Chen, University of Texas at Arlington, UTA, Arlington, TX, 1, United States, kychen@uta.edu Shan Li, Ying Rong

We experimentally study the profit sharing and the target-with-bonus mechanism in a setting with a principal setting the parameters of the mechanism, and an agent choosing his effort level (moral hazard) and managing a newsvendor store. We find the presence of fairness concerns under both mechanism, and the principal yields higher profit under target-with-bonus mechanism. A behavioral model is constructed to explain the findings.

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