Informs Annual Meeting 2017

SD21

INFORMS Houston – 2017

SD19

2 - The Valuator’s Curse is Entrepreneur’s Boon: Decision Analysis of Post-launch Surprise

342A Operations Issues in Agriculture Sponsored: Manufacturing & Service Oper Mgmt, iFORM Sponsored Session Chair: Onur Boyabatli, Singapore Management University, Singapore, 178899, Singapore, oboyabatli@smu.edu.sg 1 - Reining in Onion Prices by Introducing a Vertically Differentiated Substitute: Models, Analysis, and Insights Omkar Palsule-Desai, Indian Institute of Management Indore, Indore, India, omkardpd@iima.ac.in, Muge Yayla Kullu, Srinagesh Gavirneni We examine the pricing ordeal in India’s onion markets caused by the fresh produce traders. As a remedy, policy makers have been proposing to establish processed produce competition in the market by either cooperatives or private firms. We formulate and analyze this situation in a mathematical model that captures (i) competition between non-profit and for-profit organizations, (ii) consumers’ valuation discount for the processed produce, and (iii) perishability of the fresh produce. We identify and discuss the conditions under which (i) it is optimal to introduce the processed produce; and (ii) the processed onion should be managed by cooperatives instead of private firms. 2 - Pricing of Wine Futures and Recently Bottled Wines under Weather Uncertainty Burak Kazaz, Syracuse University, Whitman School of Management, 721 University Avenue, Syracuse, NY, 13244, vUnited States, bkazaz@syr.edu, M.Hakan Hekimoglu Using a comprehensive set of data gathered from Liv-ex and the world’s largest wine distributor, this study examines the pricing of wine futures (i.e., wine sold in advance before it is bottled) and recently bottled wines. Our study helps wine distributors build a more sophisticated understanding of how young wine prices evolve based on various weather and market indicators. 3 - Understanding Farmers Crop Allocation Decisions and the Role of Intermediaries Sripad K. Devalkar, Indian School of Business, Ac3 L1 Room 3114, Hyderabad, 500032, India, sripad_devalkar@isb.edu, Sridhar Seshadri, Bharat Ramaswami Exclusive cultivation of high yield varieties of rice and wheat crops has led to depletion of groundwater tables and soil fertility in many states of India. In this research, we identify major factors including access to labour, markets, and information that affect the farmers’ decisions not to diversify to alternate crops that are beneficial to the farmer and the environment. We consider the role of supply chain intermediaries in enabling farmers to diversify and test the model using data on farmers’ crop allocation decisions in the state of Punjab. 4 - Optimal Supply Planning for Commercial Seeds Utku Serhatli, INSEAD, Constance de le Boulevard, Fontainebleau, 77590, France, utku.serhatli@insead.edu, Andre Du Pin Calmon, Enver Yucesan We analyze the optimal production and inventory assortment decisions of a seed manufacturer. We first derive the structure of the optimal decisions for the general case and characterize solutions for the single-period case. Second, we demonstrate the impact of operational flexibility: Salvaging opportunity motivates higher production through the mitigation of yield risk and postponement strategy impacts the optimal production quantity via overage cost reduction and demand pooling effects. Third, our numerical results show that while the salvaging strategy provides protection against yield uncertainty, the postponement strategy is an effective defense against demand uncertainty. 342B Design Choices in Innovation Management Sponsored: Technology, Innovation Management & Entrepreneurship Sponsored Session Chair: Pascale Crama, Singapore Management University, Singapore, 178899, Singapore, pcrama@smu.edu.sg 1 - Delegated Testing of Design Alternatives Jochen Schlapp, University of Mannheim, Wilhelm-Leuschner-Str. 241, Griesheim, 64347, Germany, jschlapp@bwl.uni-mannheim.de The testing of different design alternatives is a vital element of any R&D process. Yet, in reality, the benefits of testing are not easy to harvest because these activities are usually delegated to experts who may pursue their own agenda. We examine how to optimally incentivize these experts and how to design the testing process. SD20

Onesun Steve Yoo, University College London, School of Management, Gower Street, London, WC1E 6BT, United Kingdom, onesun.yoo@ucl.ac.uk, Kevin F.McCardle

Evidence from IPOs show that entrepreneurial ventures tend to be initially over- valued. A common explanation is irrationality, e.g. overconfidence. We provide a rational explanation which we term the valuator’s curse. It is similar in nature to the winner’s curse in auctions and the optimizer’s curse in decision analysis, but the source is neither from the competitive nor optimization effects. The effect is generated in the evaluation itself, even though the inputs to the evaluation are unbiased. We formalize it in a Bayesian setting, and suggest several approaches to mitigate the effect. 3 - Effect of Flexibility on Consumption of Services Sreekumar R. Bhaskaran, Southern Methodist University, Cox School of Business, P.O. Box 750333, Dallas, TX, 75275, United States, sbhaskar@mail.cox.smu.edu, Rajiv Mukherjee, Sanjiv Erat In this paper, we experimentally investigate how flexibility in consumption interacts with the actual usage of a service by consumers. Subsequently, we study a firm’s pricing and capacity planning decision under the presence of these effects. The results have interesting implications in industries where managing congestion is an important consideration. 4 - Sourcing Innovative Goods: System or Component Zhi Chen, INSEAD, 1 Ayer Rajah Avenue, Singapore, Singapore, zhi.chen@insead.edu, Jurgen Mihm, Jochen Schlapp Many purchasing projects involve buying complex systems, which require the suppliers to perform some custom product or technology development regardless of whether they win the project or not. Viewing such a procurement setting through the lense of contest, we study under which circumstances a buying firm should source an integrated system or individual components. 342C Data-driven Decision Making in Healthcare Invited: InvitedHealthcare Systems and Informatics Invited Session Chair: Taewoo Lee, University of Houston, Houston, TX, 77204-4008, United States, tlee20@central.uh.edu 1 - Patient Specific Radiotherapy Treatment Policy: A Data-driven POMPD Framework Nasrin Nouri, University of Houston, Houston, TX, United States, nnouri2@uh.edu, Gino Lim In radiotherapy treatment planning the goal is to deliver the prescribed dose to the tumor structure while sparing organs at risk and normal tissues. Currently an equal dose is delivered in all treatment sessions, however tumor biological response to radiation is not constant during the whole treatment horizon. Depending on tumor density and shape, the growth rate of tumor cells and their sensitivity to radiation will change. Therefore, a dynamic customized treatment plan is required for each patient and each tumor site. In this study, we develop an indefinite horizon, constrained POMDP framework to provide optimal treatment policy where the state of tumor before each treatment session is uncertain. 2 - Personalizing Health Treatments using Bayesian Inverse Optimization Anil Aswani, UC Berkeley, 8 10th St, Apt 1704, San Francisco, CA, 94103, United States, aaswani@berkeley.edu, Philip Kaminsky, Yonatan Mintz, Elena Flowers, Yoshimi Fukuoka Treatments for managing chronic disease are sensitive to patient adherence, as well as to the treatment efficacy on each patient. Better quantification of such parameters can improve the efficiency of health care delivery (by more accurate allocation of costly treatment resources) and improve health outcomes (by prompting earlier escalation of care when needed). This talk describes a Bayesian approach to inverse optimization that can quantify such parameters. We provide mathematical programming formulations for and theoretical results about our approach, and conclude with simulations that show the effectiveness of our approach in personalizing a weight loss and physical activity treatment. SD21

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