Informs Annual Meeting Phoenix 2018

INFORMS Phoenix – 2018

TD16

2 - Competition Between Two-sided Platforms Under Demand and Supply Congestion Effects Fernando Bernstein, Duke University, Fuqua School of Business, 100 Fuqua Drive, Durham, NC, 27708-0120, United States, Gregory A. DeCroix, N. Bora Keskin This paper explores the impact of competition between two ride-sharing platforms. Customers’ and drivers’ utilities are sensitive to the prices set by the platforms and to congestion in the system. We consider two scenarios, one in which each driver works exclusively for a single platform (“single-homing”) and another scenario in which drivers may work for both platforms (“multi-homing” or “multi-apping”). 3 - Price, Wage and Fixed Commission in On-demand Matching Yun Zhou, McMaster University, 1280 Main Street West, Hamilton, ON, L8S 4M4, Canada, Ming Hu We study an on-demand platform’s price and wage determining problem under uncertain market conditions. Demand and supply functions have different forms in different conditions. While the platform can jointly optimize price and wage in each condition, our research shows that the simpler fixed commission structure achieves a decent portion of profit. n TD18 North Bldg 128A Operations/ Marketing Interface II Contributed Session Chair: Lifei Sheng, University of Houston-Clear Lake, 2700 Bay Are Boulevard, Houston, TX, 77058, United States 1 - Nonlinear Pricing for Yield Management and Countering Strategic Consumer Behavior Jing Zhou, Associate Professor, University of North Carolina- Charlotte, 9201 University City Blvd, Belk College of Business, Charlotte, NC, 28223, United States, Moutaz J. Khouja In this study, we examine the impact of using a nonlinear pricing “buy one at regular price get the second for x% off on the optimal order quantity and the profit of a newsvendor. We also examine the above questions in the presence of strategic consumers. Implementing the nonlinear pricing may increase demand more than by using a straight per-unit discount, and, therefore reduces strategic consumers’ chances of obtaining a unit at a discount which decreases their incentive to wait. Thus, this type of discount can be used to counter strategic consumer behavior. 2 - Robust Salesforce Contracts with Inventory Considerations Xiangyin Kong, Mr, Xi’an Jiaotong University, No. 28, Xian ning Road, Bei ling District, Xi’an City, Shaanxi Province, China, Tat Chee Avenue, Kowloon, Hong Kong SAR, Xi’an, 710049, China Xiangyin Kong, Mr, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong SAR, Hong Kong, China, Yimin Yu, Gengzhong Feng We consider the salesforce compensation with limited inventory and model uncertainty where the demand is censored by the lost sales and the parameters of the underlying demand distribution is uncertain. The firm jointly decides the compensation plan and inventory levels by the worst-case criterion subject to the robust incentive compatibility and limited liability condition. We show that a linear contract with commission rates decreasing in inventory is optimal; and that under the optimal robust contract, the firm tends to understock with a multiplicative demand model, contrary to the stock-more effect in the literature; while it can either overstock or understock under a general linear demand. 3 - Free Riding Effect in Sales of a Complex New Product When Multiple Sales People Compete Vahideh S. Abedi, Assistant Professor, California State University Fullerton, Fullerton, CA, United States, Rahul Bhaskar Purchase of complex new products (e.g. insurance plans) typically depends on customer word-of-mouth both about the new characteristics of the product and about the quality of service of one or more brokers. We show that this leads to a free-riding effect between the brokers that has not been explored in the literature. We model this sales process, and validate it from membership data for an insurance product. We measure the free-riding effect, and show how the resulting model can facilitate decision making in managing the sales force. 4 - Factors Affecting the Performance of Small And Medium Sized Wholesalers in Korea Ji Min Park, KyungPook National University, Daegu, Korea, Republic of, Jaewoo Chung In this study, we analyze the factors affecting repurchase intention in the wholesale industry derived through intensive literature reviews and an exploratory study, which are classified into product, sales competence and service competency. By understanding these factors and their relationships, the authors expect managers in the small and medium wholesale industry will enable more effective management activities.

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Sustainable and Socially Responsible Operations Sponsored: Manufacturing & Service Oper Mgmt/Sustainable Operations Sponsored Session Chair: Xin Wang, Hong Kong University of Science and Technology, Hong Kong 1 - Promoting Innovative Technology in Developing Countries through Solution Based Contract Guangrui Ma, Tianjin University, 92 Weijin Road, 25A, CoME, Tianjin, 300072, China, Ying-Ju Chen, Hau Leung Lee We study farmers’ production decision and technology adoption incentives in developing countries, and then investigate how technology providing firms can use business innovation to promote the technology adoption. We show that through solution based contract, firms can help farmers overcome potential adoption barriers. 2 - To Bribe or Not to Bribe in a Procurement Auction Under Disparate Corruption Pressure Xiaoshuai Fan, Hong Kong University of Science and Technology, Kowloon, Hong Kong, Ying-Ju Chen, Christopher S. Tang This paper examines the effect of “disparate corruption pressure on manufacturers’ bribery decisions and bidding strategies in a procurement auction. In our setting, small manufacturers are highly likely to be pressed to bribe in exchange for the right of first refusal. We consider the case when only large manufacturer can choose not to bribe. After analyzing a corrupt auction model, we find that the large manufacturer can benefit from corruption even when it is disadvantaged by refusing to bribe. Consequently the large manufacturer has no incentive to expose the collusion between the auctioneer and the small manufacturer, which provides a novel explanation for the prevalence of corrupt auctions. 3 - Social Responsibility Auditing of Supply Chain Networks Han Zhang, Indiana University Bloomington, 1309 E. 10th St Ste 4100, Bloomington, IN, 47405, United States, Goker Aydin, Rodney Parker We study a buyer’s problem of auditing a three-tier supply network with general sourcing relations between adjacent tiers for social responsibility compliance. The buyer may suffer economic damages if a violation is exposed at a non-compliant supplier. To avoid damages, the buyer may judiciously audit some suppliers; in the event of a failed audit, the buyer decides to either incur a cost to rectify the supplier or drop the supplier from the supply network, losing the potential profit from production attributable to the now-dropped supplier. We characterize the equilibrium of the production activities in the supply network and the buyer’s optimal auditing strategies before the production phase. 4 - Green Technology Development and Adoption: Competition, Regulation, and Uncertainty - A Global Game Approach Xin Wang, Hong Kong University of Science and Technolog, IELM, Hong Kong, Soo-Haeng Cho, Alan Scheller-Wolf When a government is considering tightening a standard on a pollutant, their decision often is influenced by the number of firms being able to meet the tightened standard, because a higher number indicates a more feasible standard. We study how such regulation may affect a firm’s incentive to develop a new technology to reduce a pollutant. To analyze this problem, we use the global game framework recently developed in economics. We find that regulation that considers industry capability, compared with regulation that ignores it, can more effectively motivate development of a new green technology. Surprisingly, uncertainty in the payoff can also help promote development of a new green technology. n TD17 North Bldg 127C Joint Session MSOM/Practice Curated: Topics on Two-Sided Platforms Sponsored: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Fernando Bernstein, Duke University, Durham, NC 1 - The Impact of the Gig-economy on Financial Hardship Kaitlin Daniels, Washington University in St. Louis, Saint Louis, MO, United States, Michal Grinstein-Weiss We empirically measure the impact of Uber’s entrance into a market on the welfare of workers. Measures of worker welfare considered include income and financial hardship (e.g. failure to pay bills on time). Analysis elucidates the role of gigs like Uber within the broader economy.

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