Informs Annual Meeting 2017

TD11

INFORMS Houston – 2017

TD10

TD11

330B Role of Transparency and Incentives in Managing Services and Supply Chains Sponsored: Manufacturing & Service Oper Mgmt Sponsored Session Chair: Damian Beil, University of Michigan, Ann Arbor, MI, 48109-1234, United States, dbeil@umich.edu 1 - Lifting the Veil: the Benefits of Cost Transparency Firms typically treat their costs as tightly-guarded secrets. We test the effect of cost transparency on purchases. We begin with a natural field experiment conducted with an online retailer, in which cost transparency increased sales. We subsequently replicate this field experiment in a controlled lab setting and differentiate cost transparency from other forms of transparency, show that the effect is mediated by consumers’ trust in the firm, and demonstrate that cost transparency only boosts purchase interest when it is voluntarily instated by the firm. These results imply that the proactive revelation of costs can improve a firm’s bottom line. 2 - Risk Drivers for Economically Motivated Food Adulteration in China’s Farming Supply Chains We employ Heckman’s sample selection framework to empirically investigate whether and how structural properties of China’s farming supply chains (across five industries) and the strength of governance (measured based on factual as opposed to perception data) within the regions in which the supply chains operate jointly influence the risks of economically motivated adulteration (EMA) of food. Our results highlight that both supply chain dispersion and weak local governance are associated with higher EMA risks. Our insights could help food manufacturers, importers, and regulators to proactively and systematically identify, prevent, and mitigate EMA risks. 3 - Performance Based Contracts for Energy Efficiency Projects Sam Aflaki, Associate Professor of Operations Management, HEC Paris, 1 Rue De La Liberation, Jouy en Josas, 78351, France, aflaki@hec.fr, Liang Ding, Roman Kapuscinski Energy efficiency projects are often executed by specialised entities, namely energy service companies (ESCOs). A typical ESCO’s core business is conducted using performance-based contracts, whereby payment terms depend on the energy savings achieved. This paper studies ESCO contract design issues, focusing primarily on the residential market for energy efficiency. We study the coordination potential of multiple piecewise linear contracts including shared savings contracts, guaranteed savings contracts and ‘chauffage’ contracts that are used in practice. We show that although coordinating contracts do not exist, simple practical contracts work reasonably well. 4 - Using Transparency to Manage the Sourcing of Complex Non-routine Litigation Services Jacob Chestnut, University of Michigan, Ann Arbor, MI, United States, jacobpc@umich.edu, Damian Beil Complex services, such as non-routine litigation (approximately $50 billion in 2015), are often billed on an hourly basis. This arrangement creates opportunities for the supplier (i.e. outside counsel) to drive up costs for the buyer (i.e. general counsel) through the inefficient use of time and resources. A critical hurdle preventing better management and oversight by the buyer is the lack of transparency regarding the work to be done by the supplier. In this paper, we investigate how to achieve this transparency, and what the benefits are of doing so. In particular, we study a buyer who creates a “process map” of litigation, which then serves as the basis for transparency with the supplier. Ryan Buell, Harvard Business School, Morgan Hall 429, Boston, MA, 02163, United States, rbuell@hbs.edu, Bhavya Mohan, Leslie John Yanchong Zheng, Massachusetts Institute of Technology, Cambridge, MA, United States, yanchong@mit.edu, Yasheng Huang, Retsef Levi, Stacy Springs, Shujing Wang

332A Healthcare Operations Sponsored: Manufacturing & Service Oper Mgmt,

Service Operations Sponsored Session Chair: Opher Baron, University of Toronto, Toronto, ON, M5S 1L7, Canada, opher.baron@rotman.utoronto.ca 1 - Dynamic Scheduling of Home Care Patients to Medical Providers Andre Augusto Cire, University of Toronto Scarborough, Department of Management, UTSC, 1265 Military Trail, Toronto, ON, M1C-1A4, Canada, acire@utsc.utoronto.ca, Adam Diamant Home care aims at providing personalized medical care and social support to patients within their own home. Since 2014, it has been the fastest-growing US industry attending to more than 14 million patients per year. In this work, we propose a dynamic scheduling framework to assist in the assignment of patients to practitioners. Our technique formulates the assignment problem as a discrete- time Markov decision process, which is tackled by a policy improvement heuristic that builds upon the agencies existing assignment strategies. We show numerical results assessing the quality of our policies with data from a Canadian home care provider. 2 - How do Perception and Self Interests of Patients Affect Emergency Department Crowding in Hospitals Shrutivandana Sharma, Singapore University of Technology and We investigate the crowding problem in hospitals’ emergency departments (EDs) from the perspective of demand management. We propose a novel congestion game model that provides the first systematic methodology to simultaneously analyze the effects of ED resource allocation as well as patients’ perception and self-interests when they can choose between ED and primary care. We perform extensive numerical experiments to study the impact of perception errors and patients’ self-interests on ED demand and resulting crowding, and compare them with optimum social welfare maximizing patient flows. 3 - M/M/C Queues with Two Priority Classes and Abandonment Jiamfu Wang, Nanyang Technological University, Singapore, Singapore, wangjf@ntu.edu.sg, Tianshu Lu, Opher Baron In this paper, we consider a system with two priority classes and abandonment. The high-priority customers are infinitely impatient, while the low-priority customers are finitely impatient. This system is modeled as a two-dimensional Markov chain. We show the difficulty in solving this model and propose a new method in finding its steady state distribution. Such a system has many applications in practice, including machine breakdown, network service, call centers, and healthcare. Some management insights are shown for the above applications. The method we develop can be applied to other multi-dimensional Markov chains. We briefly discuss the generalizability of our method. 4 - Effect of Emergency Room Priority Rules on TPIA and LOS Tianshu Lu, Rotman School of Management, University of Toronto, 105 St George St, Toronto, ON, M5S.3E6, Canada, Tianshu.Lu15@Rotman.Utoronto.Ca, Dmitry Krass, Opher Baron Excessive waiting in emergency departments, particularly before the initial physician assessment (known as TPIA) can lead to tragic outcomes. One hospital in Ontario has achieved large decreases in TPIA by re-configuring the system and changing the priority rules between new and in-process patients. However, these changes increase variability of waiting time and may increase the average Length of Stay (LOS). Using the empirical data, we estimate the ratio of changes in TIPA and LOS. Our results show that the relative increase in LOS is negligible compared to the decrease in TPIA. Design, 8 Somapah Road, Singapore, 487372, Singapore, shrutivandana@sutd.edu.sg, Ying Xu, Manu Kumar Gupta

379