Informs Annual Meeting Phoenix 2018

INFORMS Phoenix – 2018

TE17

3 - Channel Coordination Between Manufacturers and Competing Retailers with Fairness Concerns Rikuo Yoshihara, Keio University, Yokohama, Japan, Nobuo Matsubayashi We consider a two-tier supply chain where a single manufacturer sells its product to consumers through two competing retailers, and investigate how fairness concerns, where all channel members have inequity aversion, may affect channel coordination. We show that when the retailers are moderately differentiated, all channel members’ fairness concerns can achieve the profit distribution among the channel members that satisfies the maximum channel profitability, the maximum channel utility, and that increases their individual profits compared with the case without fairness concerns. 4 - Encroachment and Process Investment with Spillovers Houcai SHEN, Nanjing University, Department of Management Science, and Engineering, Nanjing, 210093, China, Xia Jing In this paper, we reveal that a retailer may benefit from supplier encroachment. We develop game theoretic models under different cases and then make two- party comparisons of the equilibrium outcomes. The results show that the supplier prefers encroachment, despite of whether he makes investment. Nevertheless, his investment policy depends critically on a threshold of investment efficiency. The retailer is better off when the two products are sufficiently differentiated and investment externality is strong enough. 5 - Retail Competition at the E-commerce Age Qiang Li, Rutgers Business School-Newark and New Brunswick, New Brunswick, NJ, United States, Xiaowei Xu We study retail markets, in which a brick-and-mortar retailer competes against an e-retailer. Many department stores announced to close more stores. On the other side of the competition, e-retailers have been growing their business at a double- digit annual rate. The brick-and-mortar retailer needs economies of scale to cover indirect costs, but the e-retailer is free from the scale constraint. We build a mathematical model and try to answer some questions such that: will online retailers win the final trophy and eliminate more local stores in the next decade? What’s the suitable trade zone of a local store on certain population density? 6 - Joint Optimization of Variable Pricing and Supply Philippe Chevalier, Professor, UCLouvain, Louvain School of Management - CORE, L1.03.01, Louvain La Neuve, B1348, Belgium, Alejandro Lamas In most of the lot-sizing models, demand is considered as a parameter and in most pricing models the supply of goods is considered as a parameter. We develop new models and algorithms to jointly optimize supply and demand management combining lot sizing and variable pricing with strategic customers. In particular, we study the optimal scheduling of promotions to maximize profits taking into account revenues but also operations costs. n TE19 North Bldg 128B Inventory Ordering and Dynamic Assortment Decisions in Revenue Management Sponsored: Revenue Management & Pricing Sponsored Session Chair: David Simchi-Levi Co-Chair: Will Ma, Massachusetts Institute of Technology, Cambridge, MA, 02139, United States 1 - Online Assortment Optimization with Reusable Resources Vineet Goyal, Columbia University, 304 S.W. Mudd Building, 500w 120th Street, New York, NY, 10027, United States, Garud N. Iyengar, Shuangyu Wang We consider an online assortment optimization problem with n substitutable products with reusable capacities. In each period, a user with a preference model (potentially adversarially chosen) arrives to the platform, and is offered an assortment of products that have available capacity. The goal here is to compute a policy that maximizes the expected revenue of the platform over a finite horizon. We show that a simple myopic policy, that does not require any information about future arrivals or the distributions of usage time, is 1/2 optimal with respect to a clairvoyant optimal that has full information about the sequence of user types (or choice models) and the usage time distributions.

n TE17 North Bldg 127C Joint Session MSOM/Practice Curated: New Frontiers in Operations Management Sponsored: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Nitin Bakshi, University of Utah,Salt Lake City, UT, 84112-8939, United States 1 - Mitigating Disruption Cascades in Decentralized Supply Networks Nitin Bakshi, University of Utah, 1655 East Campus Center Drive, Salt Lake City, UT, 84112-8939, United States, Shyam Mohan Using a game-theoretic analysis, we study how firms in a decentralized supply network invest in mitigating the risk from disruption cascades. Specifically, we highlight the informational implications of the equilibrium investments 2 - The Emergence of Superstar Firms: Endogenous Multi-market Competition Kostas Bimpikis, Stanford University, 655 Knight Way, Stanford, CA, 94305, United States, Sergio Camelo, Michael Koenig We analyze competitive markets with multi-product firms competing in Cournot. We provide an equilibrium characterization in which both production levels and the market structure are endogenously determined. For homogeneous firms and convex productioncosts we show that the equilibrium market structure is such that each firm participates in only one market. In contrast, in the presence of economies of scale the resulting market structure takes the form of a nested graph. We recapitulate nestedness as a novel empirical fact in a unique panel dataset of firms. The policy implications are discussed with examples of deregulation affecting market entry, firm exi and mergers and acquisitions. 3 - Designing Rewards-based Crowdfunding Campaigns for Strategic Backers Soudipta Chakraborty, Duke University, Durham, NC, United States, Robert Swinney We study a model of rewards-based crowdfunding with the all or nothing funding mechanism. The creator of a campaign solicits pledges from backers, and if total pledges exceed a pre-determined threshold, the campaign is successful, the creator receives all pledges and each backer receives a reward. Otherwise, the campaign fails and backers are refunded their pledges. We determine how a creator should design her campaign when the uncertainty of receiving the reward makes backers behave strategically. n TE18 North Bldg 128A Operations/ Marketing Interface III Contributed Session Chair: Philippe Chevalier, UCL, Louvain School of Management - CORE, L1.03.01, Louvain La Neuve, B1348, Belgium 1 - Service Investment for Online Retailers with Social Media Ruiqi Hou, University of Science and Technology of China, No.96 Jinzhai Street,Room 706,School of Management, USTC East Campus, Hefei, 230026, China We investigate the impact of investments in customer service experience in a market with one or two major competing online retailers. The firms decide on investments aimed at improving the customer service experience. We distinguish two variants: one Nash case and a leader-follower (Stackelberg game) case. For both cases, the optimal investment cost, optimal profit per unit time, and the effect on market share are calculated. We show that the presence of a social network leads to faster convergence of the market, while it also impacts the profits and market share. Numerical analysis shows that both the leader and the follower invest more when a social network exists and higher profits are gained. 2 - Creating Value from False-failure Returns Eylem Koca, Ozyegin University, Nisantasi Mah. Orman Sk. 34-36, Cekmekoy, Istanbul, 34794, Turkey We study the problem of creating the most value out of false-failure returns (consumer returns with little to no verifiable defect). In a comprehensive two- period model incorporating product information, return policies, product generations and trade-in upgrades, we identify the optimal conditions for the seller to choose remanufacturing, open-box sales or salvaging, when faced with false-failure returns from strategic consumers. We also investigate the implications of consumer moral hazard and the implications on sustainability performance.

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