Informs Annual Meeting 2017

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INFORMS Houston – 2017

3 - Optimality of Price-setting Newsvendor Problems Subject to Mean-variance Risk Measures: An Elasticity Approach Javier Rubio-Herrero, Assistant Professor, St. Mary’s University, One Camino Santa Maria, San Antonio, TX, 78228, United States, jrubioherrero@stmarytx.edu, Melike Baykal-Gursoy We introduce a set of sufficient conditions for the optimality of certain price- setting newsvendor problems in terms of three different elasticities, namely, the lost sales rate elasticity, the optimal price elasticity, and the elasticity of the excess of safety stock. Our idea is to give a more managerial approach to the assessment of optimality in price and inventory decisions for this type of inventory problems. 4 - Inventory Model for a Fixed Life Perishable Product with Price and Inventory Level Dependent Demand Nilesh Asnani, Doctoral Candidate, Indian Institute of Management Indore, Rau-Pithampur Road, Indore, 453331, India, f14nilesha@iimidr.ac.in, Hasmukh Gajjar, Bhavin J. Shah In this study, we consider a deterministic demand that depends upon deterioration rate, price discount, and displayed inventory level. We propose inventory model to optimize retailer’s profit by optimally determining order quantity, shelf space, and price discount. 5 - Inventory Strategy in O2O Supply Chain Based on Drop Shipping by the Retailer Yang Zhou, Huazhong University of Science and Technology, Wuhan, China, m201673799@hust.edu.cn, Shihua Ma In order to solve the order delivering dilemma of manufactures’ electronic channel, O2O model based on drop shipping by the retailer was proposed. Taking newsvendor model to analyze the optimal stocking decisions in three different models of manufacturers and retailers. Furthermore, through numerical experiments, we analyze the impact of demand uncertainty and drop shipping fee on the optimal inventory levels and the optimal choices of manufacturers and retailers. 340A Storage and Flexibility in Energy Systems Sponsored: Energy, Natural Res & the Environment Environment & Sustainability Sponsored Session Chair: Rodrigo Moreno, University of Chile, Tupper 2007, Santiago, 2007, Chile, rmorenovieyra@ing.uchile.cl 1 - Application of Stochastic Dual Dynamic Programming to the Real- Time Dispatch of Storage under Renewable Supply Uncertainty Anthony Papavasiliou, CORE, UCL, Voie du Roman Pays 34, L1.03.01, Office b.114, Louvain la Neuve, 1348, Belgium, tpapva@hotmail.com This talk presents a multi-stage stochastic programming formulation of transmission constrained economic dispatch subject to multi-area renewable production uncertainty, with a focus on optimizing the dispatch of storage in real- time operations. This problem is resolved using stochastic dual dynamic programming. The applicability of the proposed approach is demonstrated on a realistic case study of the German power system calibrated against the solar and wind power integration levels of 2013-2014, with a 24-hour horizon and 15- minute time step. The value of the stochastic solution relative to the cost of a deterministic policy amounts to 1.1%, while the value of perfect foresight relative to the cost of the stochastic programming policy amounts to 0.8%. The relative performance of various alternative real-time dispatch policies is analyzed, and the sensitivity of the results is explored. 2- Power System Planning Considering Flexibility Requirements: Impact of Energy Storage Angela Flores, University of Chile, Av Tupper 2007, Santiago, Chile, angelafq@gmail.com, Kai Strunz The capacity planning problem with high penetration of variable renewable generation is addressed by a multi-stage stochastic model including unit commitment constraints such as: minimum operating times, ramp rates, operating reserves and start-up costs. Different energy storage technologies are modeled and included as investment options. The resulting large-scale MILP is solved by the column generation algorithm. The impact of different energy storage systems in the optimal power mix and their role in the integration of renewables are analyzed. 3 - Co-optimizing Network and Storage Investments in Electricity Systems: A Stochastic Optimization Approach Rodrigo Moreno, University of Chile / Imperial College, Tupper 2007, Santiago, 2007, Chile, rmorenovieyra@ing.uchile.cl, Hector Otarola, Angela Flores We present a stochastic optimization model to determine optimal investment decisions in planning under uncertainty in the long term. The model optimizes MD17

new network investments along with energy storage investments to minimize both investment and system operational costs. Uncertainty is associated with long-term scenarios of investment costs, operational costs, demand growth and policy incentives. We solve the optimization model through a column generation algorithm which is compared against the performance of progressive hedging. We conclude on computational performance and quality of the solutions to appropriately allocate investments in new transmission lines and storage plants.

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340B NSF Funding through Operations Engineering Program Invited: NSF Invited Session Chair: Irina Dolinskaya, National Science Foundation, National Science Foundation, Herndon, VA, 20170, United States, irina.s.dolinskaya@gmail.com 1 - Navigating NSF: Funding Opportunities at NSF Georgia-Ann Klutke, National Science Foundation, National Science Foundation, Arlington, VA, 22230, United States, gaklutke@nsf.gov, Irina Dolinskaya The National Science Foundation (NSF) offers funding opportunities for investigators working in industrial engineering & operation research, within the disciplinary programs in Engineering and other directorates, and through cross- cutting initiatives that are foundation-wide. This presentation will describe opportunities that are relevant to the Industrial and Operations Engineering communities, with particular emphasis on the Operations Engineering program in the Division of Civil, Mechanical & Manufacturing Innovation. The talk will describe guidelines for proposal preparation and NSF’s Intellectual Merit and Broader Impacts criteria. Q & A session will follow the presentation. 342A Operations Decisions in the Presence of Tax Sponsored: Manufacturing & Service Oper Mgmt, iFORM Sponsored Session Chair: Vernon Hsu, Shatin, Hong Kong, vhsu@cuhk.edu.hk 1 - Ex-post Transfer Pricing in a Multinational Firm Zhu Kaijie, Chinese University of Hong Kong, Shatin, Hong Kong, kzhu@baf.msmail.cuhk.edu.hk, Vernon Hsu, Xiaopeng Zhang We study a decentralized transfer-pricing model in which regional divisions of a multinational firm decide retail prices to maximize their respective profits before its headquarter determines the transfer price to maximize the firm-wide after-tax profit. Our analysis indicates such ex-post transfer pricing may render gaming behaviors by the regional divisions and thus a distortion in their decision making. The gaming behaviors can cause severe consequences, e.g., the firm’s profit being decreased in the presence of tax rate reduction. We present approaches to mitigating the gaming behaviors. 2 - The Impact of Arm’s Length Principle (ALP) on a Supply Chain and Consumers when a Rival is Also a Customer We consider a supply chain with a vertically integrated producer (VIP) and a rival retailer who is also a wholesale customer of the VIP. We study the wholesale pricing decision of the VIP and the quantity decisions of both retailers whose retail expertise in the market are not necessarily the same. In particular, we investigate the impact of the regulation on the transfer pricing of the VIP, which is commonly referred to as the arms length regulation, on the operational decisions of each entity in this supply chain and consumers. 3 - The Internal Decentralization Effects in Off-sourcing Procurement Gangshu Cai, Santa Clara University, Department of OMIS, 216n Lucas Hall, Santa Clara, CA, 95053, United States, gcai@scu.edu, Zhiqiao Wu, Jiafu Tang We study the internal decentralization effects in different types of offshore procurements and show that a firm can benefit from more internal decentralization. MD19 Kun Soo Park, Associate Professor, KAIST, 85 Hoegiro, Dongdaemum-Gu, Seoul, 130-722, Korea, Republic of, kunsoo@kaist.ac.kr, Woonghee Tim Huh, Se Youn Jung

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