Informs Annual Meeting 2017

TC32

WC42INFORMS Charlotte – 2011

TC32

2 - A Multi-level Demand System for Differentiated Fare Products in Airline Industry Hunkar Toyoglu, Senior Director, Sabre Airline Solutions, Southlake, TX, 76092, United States, hunkar.toyoglu@sabre.com, Yuhui Shi, Evrim Dener, Mu Liu, Joakim Kalvenes We discuss econometric and theoretical considerations in specifying a demand system and suggest a flexible model to understand the competition between differentiated fare products in airline industry. We develop a multi-level hierarchical demand system and provide formulas and derivations in estimating own and cross price elasticity of demand in an unrestricted manner. Using transaction data, we estimate expenditure elasticity, own-price and asymmetric cross-price elasticity of demand for airlines and their competitors. We then identify which fare products are equivalent in the eyes of consumers, conduct competitive analysis and draw inference on the competitive structure in a market. 3 - Improving Overbooking Decisions using Customers Past Behaviour Vinaysingh Chawan, Indian Institute of Management Indore, IIM.Indore Campus, Fac. Block B, Indore, 453556, India, vinaysingh@iimidr.ac.in Overbooking models depend upon predictions of last moment cancellations and no-shows. A model is proposed to use CRM data to build predictive models that classify customers and assign a probability of cancellation/no-show to each customer/class. This predictive model is augmented with a revenue management model that considers the trade-offs associated with the overbooking decisions. The potential for revenue enhancement with this method is estimated using simulated data. 4 - A Choice Based Optimization Approach in Flexible Mobility on Demand Shadi Sharif Azadeh, Assistant Professor, Erasmus University Rotterdam, Burgemeester Oudlaan 50, Rotterdam, 3062 PA, Netherlands, sharifazadeh@ese.eur.nl, Michel Bierlaire, Bilge Atasoy, Moshe E.Ben-Akiva, Yousef Maknoon One of the main challenges of operation managers is to decide about how to o er a mix of products to the customers at a given time with the objective of maximizing the expected revenue as well as maximizing the customers’ satisfaction. The expected revenue from an o er set is defined by the price and the demand of each of the o ered products. Smart phones have revolutionized urban transportation and mobility. We introduce an integrated choice-based optimization model that takes into account the cost of routing for taxis and shared taxis while accounting for customer choice behavior. 5 - Drivers of Degree of Hotel Revenue Management System Sophistication Lizao Zhang, Washington State University, 1630 NE Valley Rd Apt V303, Pullman, WA, 99163, United States, lizao.zhang@wsu.edu, Timothy K.Baker, Xun Xu We aim to develop a measure of hotel revenue management system sophistication. We revise a general taxonomy for the hotel settings and use it as a dependent variable to test the drivers of the need for revenue management system sophistication. We generate the drivers by delving into the literature of management, organizational behavior, and marketing; and test the drivers using hotels from North America. 6 - Cognitive Pricing for Personalized Bundle of Products and Services Shuyu Chu, Virginia Institute of Technology, 1880 Pratt Drive, XV, Suite 1100-1, Blacksburg, VA, 24060, United States, cshuyu@vt.edu, Zhengliang Xue, Huijing Jiang, Xinwei Deng We integrate classification, regression and optimization models to provide pricing solutions for bundles of product and service businesses, in which the services are highly customized projects, possibly associated with hardware and software orders. The services have distinguished features such as the band of labor force involved, service contents (travel expense, setup, maintenance, etc.), the duration of service, risk of project, and service category. The model considers the risk and cost involved during the project, and increase the expected profit by comparing optimal prices with actual prices in a business case study.

351B Supply Chain, Shipping and Transportation Contributed Session Chair: Tao Lu, Rotterdam School of Management, Erasmus University, Rotterdam, Netherlands, lu@rsm.nl 1 - Contracting for Product Support under Information Asymmetry Nishant Mishra, Faculty of Business and Economics, KU. Leuven, Naamsestraat 69, Leuven, 3000, Belgium, nishant.mishra@kuleuven.be, Dong Li, Serguei Netessine Despite advantages of Performance-based contracts (PBC) that have been highlighted in many previous studies, the more traditional Transaction-based Contracts (TBC) are still widely adopted in the product support industry. In this paper, we build a stylized adverse selection model to explore the hidden superiorities of TBC in screening products with different failure rates when the information about product reliability is privately owned by the customer. We find that TBC can achieve separation of product reliability without losing efficiency in setting service capacity, whereas, PBC requires interactions of pricing and capacity decision, resulting in over-investment in repair capacity. 2 - A Scenario Generation Approach for Integrated Supply Chain Network Design with Risk Considerations Minghe Sun, Professor, The University of Texas at San Antonio, An optimization approach is developed for integrated design and operations for resilient supply chain networks with disruption risks. A mixed binary integer programming model is formulated. Scenarios are used to describe disruption events. Uncertainties in supplies, demands and prices are also considered. A region-wide dual-sourcing strategy, strategic emergency inventories and alternative sourcing facilities are used to increase network resilience. The Sample Average Approximation method is used to solve the proposed model with disruption risks. An illustrative example demonstrates the validity of the model and sensitivity analysis results provide important references. 3 - Deployment of Online Pickup Facility Networks for Omnichannel Supply Chain Management with GIS Byeong-Yun Chang, Ajou University, San5 Woncheon-dong, Yeongtong-gu, Suwon, 443-749, Korea, Republic of, bychang@ajou.ac.kr, Choonki Min Omni-channel supply chain management is one of the most challenging research fields in operations management arena. In this study we propose a method combining GIS and multi-criteria decision models to allow retailers providing online pickup service for omnichannel operation to determine locations for pickup sites and the type of the facilities. 4 - The Impact of Service Oriented Manufacturing on Core Enterprise in Supply Chain Ruihan Zhang, Harbin Engineering University, No. 145, Nantong Avenue, Nangang District, Ha, Harbin, 150000, China, zhangruihan0826@163.com, Bing Sun Based on the mediating role of core enterprise cost, the effect of Service-Oriented Manufacturing on core enterprise performance is explored. The result indicates that (1) Service-Oriented Manufacturing has a positive effect on the core enterprise performance; (2) Core enterprise cost in supply chain has a negative effect on the core enterprise performance; (3) Core enterprise cost plays a partial mediated role in the relationship between Service-Oriented Manufacturing and the core enterprise performance. This paper is funded by the International Exchange Program of Harbin Engineering University for Innovation-oriented Talents Cultivation. 5 - Path Based Versus Lane Based Formulation of Network Design Problems Gokhan Memisoglu, LLamasoft Inc, 2813 Barclay Way, Ann Arbor, MI, 48105, United States, Gokhan.memisoglu@llamasoft.com, Ali Taghavi, Nejat Karabakal, Zheng Ouyang Path-based formulation and lane-based formulation are usually the alternative approaches used in designing a supply chain network. In this study we review the main use cases for either of these formulations along with their pros and cons. Later, we present how we integrate these formulations for solving network design problems and show a number of related business problems solved by Llamasoft’s network optimization tool (Supply Chain Guru). 6 - Shipping to Heterogeneous Customers with Competing Carriers Tao Lu, Assistant Professor, Rotterdam School of Management, Erasmus University, Mandeville Building T09-03, P.O. Box 1738, Rotterdam, 3062 PA, Netherlands, lu@rsm.nl, Ying-Ju Chen, Jan C. Fransoo, Chung-Yee Lee We consider a shipper selling a perishable product to heterogeneous customers in a destination market. The product can be shipped via two competing carriers with distinct speeds. Our analysis reveals a trade-off between the benefits from differentiation and competition. Dual-mode shipping can therefore be inferior to restricting to a single mode. One UTSA Circle, San Antonio, TX, 78249, United States, minghe.sun@utsa.edu, Zhimin Guan, Jin Tao, Hao Wu

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