Informs Annual Meeting Phoenix 2018

INFORMS Phoenix – 2018

WA17

4 - The Race for Product Renewal Xabier Barriola, IESE Business School, Barcelona, Spain, Victor Martinez de Albaniz The continuous renewal of products for electronics or apparel has been criticized for increasing waste. While consumers appreciate novelty in settings where product utility decays over time, it is not clear how and why producers take product renewal decisions. In this work, we build a model where consumers decide to renew their products as a function of product launches, and firms optimize product features and introduction times. We find that a monopoly leads to efficient launch decisions while competition results in an oversupply of new products. n WA17 North Bldg 127C Supplier Enabled Innovation and Supply Chain Management Sponsored: Manufacturing & Service Oper Mgmt/Supply Chain Sponsored Session Chair: Noam Shamir, Tel Aviv University, Tel Aviv, 8, Israel Chair: Hyoduk Shin, UC-San Diego, La Jolla, CA, 92093, United States 1 - Government-to-Government (G2G) Contracts for India’s Pulses Procurement: Ad-Hoc Bargaining, Long-Term Contracting and Supplier Diversification Liying Mu, University of Delaware, Newark, DE, United States, Bin Hu, Srinagesh Gavirneni India depends on pulses as a vital source of protein, yet has faced pulses crises driven by insufficient and uncertain internal yields and ad-hoc importing policies. The government is experimenting with long-term importing policies. Inspired by India’s importing practice, we set out to examine G2G ad-hoc bargaining versus long-term contracts under the Nash-bargaining framework. Our main results are: (a) buyer’s bargaining power does not necessarily improve its utility in ad-hoc bargaining, (b) long-term contracts can improve the buyer’s utility if the buyer has sufficiently high bargaining power, and (c) bargaining power of the buyer can be improved through supplier diversification. 2 - Does Competition Help Drug Shortage Recovery? Junghee Lee, University of California, San Diego, CA, 92093-0553, United States, Hyun Seok Lee, Vixh Krishnan, Hyoduk Shin There are ongoing shortages of generic drugs in the U.S., which threaten public healthcare. While manufacturing firms argue limiting competition may mitigate the issue, the FDA and patients seriously challenge the idea. Using historical drug shortage data and competition level, we reconcile both perspectives and provide better insights. 3 - Data Analytics in Supply Chain Quality Ahmet Colak, Clemson University, Greenville, SC, 29601, United States, Robert Bray Combining public and private auto industry data, we derive novel consumer-level and firm-level variables that influence quality improvement decisions such as recalls. Accounting for various product characteristics and spillover effects, we study a panel data from 1994 to 2015. We use data analytics and structural estimation. 4 - Organizational Design and the Ability to Exploit Complementarities: A Naturally Occurring Experiment Changseung Yoo, McGill University, Montreal, QC, Canada, Anitesh Barua, Genaro J. Gutierrez Using a naturally occurring experiment, we empirically investigate how a firm’s organizational design involving centralized or decentralized decision making can affect its ability to exploit synergies among business practices in the context of digital advertising. We find that the centralized mode better recognizes and incorporates complementarities into its decision making, while the decentralized mode fails to exploit complementarities, and thus systematically under-invests in the its decisions, leading to less overall profit. n WA18 North Bldg 128A Operations Management I Contributed Session Chair: Weixin Shang, Lingnan University (Hong Kong), 8 Castle Peak Rd, Tuen Mun, Hong Kong 1 - Simple Sequential Allocation Mechanisms Kun Soo Park, Seoul National University, 1, Gwanak-ro, Gwanak-gu, Seoul, 08826, Korea, Republic of, Bosung Kim, Seyed Iravani, Sang Won Kim

We consider an allocation of a firm’s capacity to its retail branches. The firm allocates the capacity to each branch to maximize the overall profit of the firm. Each branch makes ordering decision independently by using private information. We focus on the situation where an allocation to a retail branch should be made without full information about orders from other branches who may order later. We also incorporate branch manager’s incentive to inflate their orders (i.e., strategic ordering) to receive a more favorable allocation. 2 - Technology Upgrade in a Supply Chain with Entry Threat Guanmei Liu, Shanghai Jiao Tong University, 1954 Huashan Rd., Shanghai, 200030, China, Xiaofeng Shao This study examines a strategy that an existing buyer (he) upgrades a supplier’s production technology through direct investment when a potential buyer (she) may enter the market. We show the entry, without technology spillover, benefits the incumbent buyer under certain conditions, while it does not with technology spillover. Importantly, we reveal investing in technology upgrade may affect the concentration of the product market. Given a high production cost and a low investment cost without technology spillover, the supplier refuses to feed the entrant, incurring her entry failure and thus market monopoly. With technology spillover, it approves the entry, causing market competition. 3 - Evaluating Contract Differentiation and Participation Options under Heterogeneous Agent Information Wenbo (Selina) Cai, Assistant Professor, New Jersey Institute of Tech, Mec 308, University Heights, Newark, NJ, 07102, United States, Dashi Singham We develop a framework for optimization of contracts for agents with heterogeneous demand distributions, where agents can have a number of demand distributions, each with a number of possible demand realizations. We develop pricing schedules for this framework under two types of contracts: 1) aggregation vs. differentiation of contract options, and 2) whether agents can choose to not participate in the future after contract commitment. We show that the principal always prefers differentiation and required participations at each time period. A dual result exists for the agents, and when participation is required, contract differentiation maximizes the overall social welfare of both parties. 4 - An Empirical Analysis of Pricing Strategies for Two-sided Platforms Onur Altintas, University of Rochester, 500 Joseph C. Wilson Blvd 4-349, Rochester, NY, 14627, United States, Min-Seok Pang, Avi Seidmann Two-Sided business platforms have gained significant economic power over recent years. However, the competitive pricing decision processes at these multi-sided platforms are highly complex due to their temporal externality effects. In this study, we present the result of an extensive longitudinal analysis of pricing strategies for competitive two-sided platform games. We analyze the participants’ strategies and subsidizing behavior under different price contract structures. Our results explain how and why the winning strategy changes with the contract structure. 5 - Data-driven Inventory Allocation in Bike Sharing Network Zhenyu Gao, Tsinghua, Room 430B, Zijing Department #14, Beijing, 100084, China, Chen Wang Bike-sharing network gains an expanding popularity for its effectiveness in satisfying last-mile demand. It brings a new variant to inventory management with the demand outflow of one region also being a supply inflow to another, which makes it difficult to estimate lost sales for multiple interdependent regions. We propose a novel linear statistical model to incorporate inventory levels when estimating real demand from censored observations. Inventory redeployment policies are derived from the estimation results on a rolling basis. Numerical results show that our estimation resembles the real demand and the proposed inventory policy significantly reduces lost sales of the entire network. 6 - Incentive-driven Bilateral Transshipment in Inventory Competition Weixin Shang, Lingnan University, Hong Kong, Qi Fu, Liming Liu We construct a two-stage game model to examine the transshipment and inventory decisions in overlapping markets with both customer switching and transshipment. We find that there could be no transshipment, partial transshipment, or full transshipment, and obtain the conditions under which a unique equilibrium of order quantities exists. We show that transshipment may intensify or mitigate inventory competition and that there can exist a real incentive for competing firms to transship to others cooperatively. We show the existence of coordinating transshipment prices under which the transshipment and inventory decisions of the competing firms mimic those of the centralized optimal decisions.

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