Informs Annual Meeting Phoenix 2018

INFORMS Phoenix – 2018

WA53

5 - Integer Programming Approaches to Fisheries Observer Assignment Reed Harder, Dartmouth, 14 Engineering Drive, Hanover, NH, 03755, United States, Vikrant Vaze Fisheries observers are deployed on commercial fishing vessels to provide independent monitoring of fishing activity. However, effective deployment of observers can present significant challenges in the Western and Central Pacific Ocean: observers board and disembark hundreds of fishing vessels operated by multiple nations at remote ports scattered across the region, and transportation costs between ports can be high. In order to minimize the costs of effective observer deployment, we develop an integer programming approach for assigning observers to scheduled vessel trips, while meeting constraints imposed by the need for impartiality. Auctions and Competitive Bidding Sponsored: Auction and Marketing Design Sponsored Session Chair: Srinivasa Kartikeya Puranam, LaSalle University, 1900 Olney Ave, Philadelphia, PA, 19141, United States 1 - How Auctioneers Set Ex Ante and Ex Post Reserve Prices in English Auctions Lijia Tan, Eindhoven University of Technology, Pastoor van Arslaan, 6B, Eindhoven, 5622 CK, Netherlands We provide the direct experimental comparison of auctioneer behavior in two popular methods of procurement: reserve price English auction and English auction with renegotiation. In our experiment, the auctioneers in these two mechanisms demonstrate systematic biases relative theoretical predictions. We develop a model of subjective conditional probability judgement explains the biases. To demonstrate the robustness of our model, especially relative to standard models and those of anticipated regret we then show in a subsequent experiment that the auctioneer’s expected benefit is predicted well out of sample in an environment in which the distribution of seller’s cost is right skewed. 2 - Game Theoretic Approaches for Government Acquisition Scott L. Rosen, Mitre Corporation, 2016 Kenilworth Street, Arlington, VA, 22205, United States, Andreas Tolk, Kelly Horinek, Les Servi, Alex Odeh This talk investigates the application of game-theoretic models with an optimization engine to provide a quantitative decision support system for the government to illuminate real-time tradeoffs for acquisition decisions. The insight gained is intended to enable the generation of strategies that can quickly move vendors towards the government’s preferred negotiation point thus expediting process in acquisition while adding transparency. 3 - An Analysis of Capacity Procurement Game Lusheng Shao, University of Melbourne, 198 Berkeley Street, Level 10, Melbourne, 3010, Australia We study a procurement game in which a principal contractor procures production capacities from multiple subcontractors. The subcontractors are heterogenous in terms of their capacities and production costs. Subcontractor each quote a price that is charged to the principal contractor in exchange for their capacities. We study the optimal bidding strategies of the subcontractors and the optimal procurement strategy of the contractor. We show that in equilibrium the social optimum and collaboration between the subcontractors is achieved. 4 - Bidding and Learning in Repeated Auctions Srinivasa Kartikeya Puranam, Rutgers University, 227 Penn St, Camden, NJ, 08102, United States, Michael N. Katehakis We consider the problem of a firm that procures substitutable items in a sequence of auctions by bidding against the “market. The firm and the “market learn from each winning bid. We study bidding strategies for the firm when the objective of the firm is to maximize long run discounted profit. n WA54 North Bldg 232B Behavioral Operations – Beyond Lab Experiments Sponsored: Behavioral Operations Management Sponsored Session Chair: Yinghao Zhang, University of Cincinnati, Cincinnati, OH, 45221, United States 1 - Is Simplicity the Ultimate Sophistication? Wholesale Pricing vs. Non-linear Pricing Behrooz Pourghannad, University of Minnesota, Minneapolis, MN, 55414, United States, Guangwen Kong, Tony H. Cui n WA53 North Bldg 232A

This paper studies a manufacturer’s choice of contract when facing a boundedly rational retailer. In a supply chain with a fully rational retailer a wholesale price contract cannot perform better than buy-back and revenue sharing contracts. When the retailer is boundedly rational, we find that a wholesale price contract can dominate both buy-back and revenue sharing contracts. We characterize the condition under which a wholesale price contract is the optimal choice of the manufacturer. Our findings are supported by laboratory experiments in which human suppliers choose a contract to offer to computerized boundedly rational retailers. 2 - Does Loss Aversion Preclude Price Variation? Ningyuan Chen, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong In modern retailing, frequent discounts are seemingly at odds with the idea that price variation antagonizes loss-averse consumers and hence diminishes their demand for products and services. We model a firm selling a product over time to loss-averse consumers who differ in their sensitivity to gains/losses. We show that charging a long-run constant price may be suboptimal and then derive conditions under which the optimal policy is cyclic (e.g., a periodic markdown policy). These findings establish that loss aversion does not preclude price variation and thereby underscore the importance of incorporating consumer heterogeneity into pricing policies. 3 - The Impact of Social Learning on Consumer Subsidies for Green Technology Adoption To incentivize consumer adoption of expensive green-tech products, governments typically order consumers subsidies through rebates and tax credits. Apart from subsidies, consumers’ adoption decisions are usually also influenced by the word- of-mouth information about product quality from earlier adopters. In this paper, we study a government’s optimal dynamic subsidy decision in the presence of consumers’ social learning. 4 - Overconfident Distribution Channels Meng Li, Rutgers University, 227 Penn Street, Camden, NJ, 08102, United States We study the effects associated with overconfidence in distribution channels, where overconfidence is defined as a decision maker’s cognitive bias in perceiving the expected outcome of an uncertain event as more certain than it likely is. Our results shed some light on the design and adoption of strategies aimed at enhancing decisions and curtailing overconfidence bias of supply chain executives. 5 - Consumer Quality Reference and Offshoring in Product Recalls Kefeng Xu, University of Texas at San Antonio, 1 UTSA Circle, San Antonio, TX, 78249, United States, Yan Dong, Sining Song, Chen Zhou Product recalls are often associated with quality failures. We develop an endogenous consumer reference model with stochastic quality levels and consumer valuation of gain-loss utility, to examine the consumer’s willingness to buy in the events of recalls. We find that a product recall may revise the consumer belief toward a more negative quality outcome and therefore a lower reference point. The consumer expects a greater gain from buying the product against the lower reference point, leading to higher willingness to buy. Consumer loss aversion and supply chain offshoring are found to significantly affect the consumer willingness to buy and thus firm performance. n WA55 North Bldg 232C The Roles of Supply Chain Knowledge on New Product Introduction Emerging Topic: New Product Development Emerging Topic Session Chair: Junghee Lee, Tulane University, New Orleans, LA, United States 1 - Knowledge-based View of Outsourcing Strategies for New Product: A Game Theory Model Qiong Chen, University of Science and Technology of China, School of Management, Hefei, 230026, China, Gulru F. Ozkan-Seely, Shouqiang Wang, Aleda Roth We introduce a signaling game to examine the outsourcing strategies of a buying firm that faces two options in determining a manufacturer to produce its new product: outsource directly or indirectly (through an intermediary). We demonstrate the critical yet interesting role of outsourcing knowledge on the buying firm’s outsourcing strategies. Hang Ren, George Mason University, Enterprise Hall, 4400 University Drive, Fairfax, VA, 22030, United States, Tingliang Huang, Georgia Perakis

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