Informs Annual Meeting Phoenix 2018

INFORMS Phoenix – 2018

WA11

2 - Accelerated Sarah: Some Classical Variants Majid Jahani, Lehigh University, Kehigh University, Bethlehem, PA, United States, Nicolas Loizou, Lam Minh Nguyen, Martin Takac In this study, we propose some optimization algorithms for the finite-sum minimization problems. Our methods incorporates the ideas of Heavy Ball (HB) momentum, LBFGS and StochAstic Recursive grAdient algoritHm (SARAH). The proposed methods are called HBSARAH and LBFG2SARAH, respectively. We demonstrate experimentally that our algorithms perform well on large-scale convex optimization problems.

n WA11 North Bldg 125B Vertical Retail Supply Relationships and Assortment Management Sponsored: Manufacturing & Service Oper Mgmt Sponsored Session Chair: Stanley Lim, University of Cambridge, Cambridge, United Kingdom Co-Chair: Min Choi, California State University 1 - Optimizing SKU Selection for promotional Display Space at Grocery Retailers Olga Pak, University of South Carolina, Columbia, SC, United States, Mark Ferguson, Olga Perdikaki, Su-Ming Wu Promotional displays are a powerful tool to boost consumer engagement. As a result, we propose a methodology to identify a profit-maximizing selection of products for promotional display using grocery store sales transaction data. Our methodology results in substantial improvement in profit when compared to an industry benchmark. 2 - Category Captainship in the Presence of Retail Competition Alper Nakkas, University of Texas at Arlington, Arlington, TX, United States, Mumin Kurtulus, Yasin Alan Category captainship (CC) is a retailing practice wherein a retailer collaborates with a manufacturer to implement a category management strategy. We consider a game-theoretic model in which two retailers compete on category appeals and analyze the impact of CC on the retail competition. We find that, CC in the presence of retail competition may enable the focal retailer to steal market share from its competitor, leading to a share shifting effect. This effect is a significant determinant of the benefits of implementing CC for a retailer. In addition, we show that despite competing head-to-head with the focal retailer, the competing retailer can benefit from the focal retailer’s CC implementation. 3 - Intertemporal Segmentation via Flexible-duration Group Buying Jingchen Liu, Peking University, 5 Yiheyuan Road, Haidian District, Beijing, 100871, China, Ming Hu, Xin Zhai Motivated by the cosmetic industry, we study an innovative group buying strategy. Different from the traditional group buying, a special edition of the product is unlocked only when the number of sign-ups reaches a preset threshold, with no duration constraint. Customers need to anticipate their expected waiting time, which varies depending on their arrival time. Then such a group buying with flexible duration can result in intertemporal consumer segmentation, as different consumer segments are admitted at different times in the dynamic sign-up process. As a unique feature of group buying with flexible duration, intertemporal consumer segmentation has several nontrivial implications. 4 - Intermediation in the Supply of Agricultural Products in Developing Economies Ehsan Valavi, Harvard Business School, Boston, MA, United States, Kris Johnson Ferreira, Joel Goh The agricultural industry has been growing in developing economies, yet farmers continue to struggle. One reason for this is that farmers bear the risk of mismatched supply and demand, since farmers must make planting and harvesting decisions prior to knowing the price they can get for their crop at an auction. Recently, e-intermediaries have emerged as an alternative channel to the auction for which farmers can sell their crop; e-intermediaries use technology to inform farmers about a fixed crop price prior to harvest. We study the impact that e-intermediaries have on the supply chain. 5 - Scan-based Trading and Bargaining Power: A Structural Model of Vertical Retail Supply Relationships Stanley Lim, University of Cambridge, Cambridge, United Kingdom, Arizona State University, Tempe, AZ, United States, Min Choi, Timothy Richards, Elliot Rabinovich Rather than exchange title for goods upon delivery to store, under scan-based trading (SBT) contracts, supplier retains title until the item is purchased by the customer. The emergence of SBT raises questions of how bilateral market power affects vertical supplier-retailer relationships in a food supply network. Using a Nash-in-Nash bargaining model, panel data combining supply and demand data, and structural econometrics, we examine the relationship between SBT contracting and degree of bargaining power exercised by retailers/wholesalers in a vertical retail channel. We find both retailer bargaining power and inventory shrink are higher under SBT than direct-to-store delivery contracts.

n WA09 North Bldg 124B

Incentive Issues and Emerging Topics in Services Sponsored: Manufacturing & Service Oper Mgmt/Service Operations Sponsored Session Chair: Luyi Yang, Johns Hopkins University, Baltimore, MD, 21202, United States Co-Chair: Philipp Afeche, University of Toronto, Toronto, ON, M5S 3E6, Canadaö 1 - Tipping Point in Ride-hailing Service Systems with Sharing Option Jianfu Wang, Nanyang Business School, Nanyang Technological University, Block S3-B2C-85, 50 Nanyang Avenue, Singapore, 639798, Singapore, Geoffrey Chua, Arvind Sainathan, Akshay Vijayendiran This paper examines different car-sharing models offered by ride-hailing firms. In the traditional car-hailing model, customers are served individually by taxis or private cars. In the sharing-only model, all customers are willing to share the ride with other customers. In the hybrid model, customers may choose either individual or shared service provided by the same fleet of cars. We develop a queueing game-theoretic model to help determine the arrival rates that create the maximum customer value. We discover a tipping point in the hybrid model. When the hassle cost decreases to this point, the optimal customer behavior switches from less than 80% using shared service to all using it. 2 - Do Ratings Cut Both Ways? Impact of Bilateral Ratings on Platforms Senthil Veeraraghavan, University of Pennsylvania, Wharton School OPIM Department, 545 3730 Walnut Street, Philadelphia, PA, 19104, United States, Kartik Hosanagar, Chen Jin Traditional platforms (e.g., Amazon) use Unilateral Rating System (URS), in which customers rate sellers. However, sharing economy platforms (e.g., Uber, Lyft, Airbnb) have adopted Bilateral Rating System (BRS) that allows service providers to rate customers, and even select customers based on ratings. BRS is often purported to be better than URS, as it unlocks the hidden information for one-time interactions, by revealing ratings of customers to service providers before they make accept/reject decisions. We find that Bilateral Ratings, despite containing more information and choice, are not necessarily better for platform revenues, and they may reduce driver revenues and consumer welfare. 3 - Proactive Customer Service: Operational Benefits and Economic Frictions Kraig Delana, London Business School, PhD Program Office, London, NW1 4SA, United Kingdom, Nicos Savva, Tolga Tezcan We study a service setting where the provider may learn about customers’ future service needs and initiate service for these customers proactively if they are flexible with respect to the timing of service delivery. Utilizing both exact and asymptotic analysis, we find that proactive service can generate a significant reduction in delays for customers. Despite this, we find that customers are less willing to be flexible compared to the social optimum because of a positive externality - flexible customers benefit not only themselves but inflexible customers as well. Hence to achieve the benefits of proactive service, providers may have to incentivize customers to overcome this economic friction. 4 - Bundle Pricing of Congested Services Chenguang (Allen) Wu, Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong, Luyi Yang We study whether a monopolist running a congestion-prone service system (e.g., theme park) should sell multiple services (e.g., amusement rides) separately or together as a bundle when customers are delay- and price-sensitive. We show when and how the presence of congestion challenges prescriptive guidelines proposed by the prior literature on product bundling.

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