Pub Date : 2024-04-16DOI: 10.1177/10591478241250036
Subodha Kumar, Vinod R. Singhal
We describe the process used to identify the ten most influential papers published in the Production and Operations Management ( POM) journal in its first thirty years. We also briefly discuss and highlight the selected papers.
{"title":"EXPRESS: Ten Most Influential Papers from the First Thirty Years of the Production and Operations Management Journal","authors":"Subodha Kumar, Vinod R. Singhal","doi":"10.1177/10591478241250036","DOIUrl":"https://doi.org/10.1177/10591478241250036","url":null,"abstract":"We describe the process used to identify the ten most influential papers published in the Production and Operations Management ( POM) journal in its first thirty years. We also briefly discuss and highlight the selected papers.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140695102","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-16DOI: 10.1177/10591478241251614
The adoption of cloud computing has been accelerating over the last decade, while enterprise cloud users (“firms”) are struggling to manage their growing cloud expenditures in the face of intermittent digital demand surges caused by planned or random events. To deal with such challenges, a firm can employ reserved instances with the standard contract length (e.g., one year) to meet the stationary base demand, which we refer to as the base contracts, complemented by additional reserved instances with either standard or shorter contract lengths, which we refer to as the supplementary contracts, to cope with the demand surges. We first analyze a model whereby the surge and inter-surge durations are deterministic, demand magnitude is random, and cancellation of the reservations is allowed. We develop a capacity management plan for the firm including not only the optimal capacity levels, which follow a newsvendor-type solution, but also the optimal policy for managing the purchase, renewal, cancellation, or expiration of the supplementary contracts, which can be characterized as a two-threshold policy. Due to the complexity of the structure of the optimal policy, we also construct an effective heuristic policy by excluding the renewal option from the action space, which can be applied to a more general setting where the surge and inter-surge durations are random. We examine two model extensions: (1) when trades of reserved instances are allowed in a secondary marketplace; (2) when the firm does not have exact information about the distributions of the surge magnitude and duration while it can adjust the capacity levels as data unveils. Our analysis shows that the optimal policy for managing the supplementary contracts depends on the relative magnitude of the surge and inter-surge durations in relationship to the cancellation fee. Moreover, our numerical results show that cloud platforms that offer a secondary marketplace are more attractive to firms from a cost standpoint than those that allow cancellation only. The latter, without the secondary marketplace, however, can achieve parity with the former by offering a deeper discount rate for the reserved instances, thereby bypassing the cost of administering the secondary marketplace.
{"title":"EXPRESS: Cost Optimization in Cloud Computing: Capacity Reservation for Intermittent Random Demand Surges","authors":"","doi":"10.1177/10591478241251614","DOIUrl":"https://doi.org/10.1177/10591478241251614","url":null,"abstract":"The adoption of cloud computing has been accelerating over the last decade, while enterprise cloud users (“firms”) are struggling to manage their growing cloud expenditures in the face of intermittent digital demand surges caused by planned or random events. To deal with such challenges, a firm can employ reserved instances with the standard contract length (e.g., one year) to meet the stationary base demand, which we refer to as the base contracts, complemented by additional reserved instances with either standard or shorter contract lengths, which we refer to as the supplementary contracts, to cope with the demand surges. We first analyze a model whereby the surge and inter-surge durations are deterministic, demand magnitude is random, and cancellation of the reservations is allowed. We develop a capacity management plan for the firm including not only the optimal capacity levels, which follow a newsvendor-type solution, but also the optimal policy for managing the purchase, renewal, cancellation, or expiration of the supplementary contracts, which can be characterized as a two-threshold policy. Due to the complexity of the structure of the optimal policy, we also construct an effective heuristic policy by excluding the renewal option from the action space, which can be applied to a more general setting where the surge and inter-surge durations are random. We examine two model extensions: (1) when trades of reserved instances are allowed in a secondary marketplace; (2) when the firm does not have exact information about the distributions of the surge magnitude and duration while it can adjust the capacity levels as data unveils. Our analysis shows that the optimal policy for managing the supplementary contracts depends on the relative magnitude of the surge and inter-surge durations in relationship to the cancellation fee. Moreover, our numerical results show that cloud platforms that offer a secondary marketplace are more attractive to firms from a cost standpoint than those that allow cancellation only. The latter, without the secondary marketplace, however, can achieve parity with the former by offering a deeper discount rate for the reserved instances, thereby bypassing the cost of administering the secondary marketplace.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140696325","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-16DOI: 10.1177/10591478241249477
Haileab Hilafu, Paolo Letizia, Paolo Roma
Product customization enables consumers to tailor products to their individual preferences. One benefit of customization is its lower volume of returns. By customizing, consumers learn about their product preferences and develop a sense of attachment to the products they help “create.” As a result, they are less likely to return the purchased items. The effect of product customization on returns may depend on cultural traits of consumers, such as the extent to which they would avoid uncertainty or the degree to which they would feel “subordinate” to authority. Hence, this article studies how national cultures moderate the negative relationship between customization and returns. Our investigation analyzes a unique dataset from a leading global luxury brand manufacturer that offers both standard and customized versions of a product across more than 20 countries. We find that the disparity in return rates between standard (higher rate) versus customized products (lower rate) depends on the cultural dimensions originally introduced by Hofstede. This gap widens with masculinity and uncertainty avoidance, but narrows with power distance and individualism. Therefore, multinational firms should weigh these aspects of national cultures when designing both customization and return policies.
{"title":"EXPRESS: Product Customization and Returns: the Moderating Role of National Culture","authors":"Haileab Hilafu, Paolo Letizia, Paolo Roma","doi":"10.1177/10591478241249477","DOIUrl":"https://doi.org/10.1177/10591478241249477","url":null,"abstract":"Product customization enables consumers to tailor products to their individual preferences. One benefit of customization is its lower volume of returns. By customizing, consumers learn about their product preferences and develop a sense of attachment to the products they help “create.” As a result, they are less likely to return the purchased items. The effect of product customization on returns may depend on cultural traits of consumers, such as the extent to which they would avoid uncertainty or the degree to which they would feel “subordinate” to authority. Hence, this article studies how national cultures moderate the negative relationship between customization and returns. Our investigation analyzes a unique dataset from a leading global luxury brand manufacturer that offers both standard and customized versions of a product across more than 20 countries. We find that the disparity in return rates between standard (higher rate) versus customized products (lower rate) depends on the cultural dimensions originally introduced by Hofstede. This gap widens with masculinity and uncertainty avoidance, but narrows with power distance and individualism. Therefore, multinational firms should weigh these aspects of national cultures when designing both customization and return policies.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140697917","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-15DOI: 10.1177/10591478241249122
X. Sun, Shiwei Chai, Anand A. Paul, Lingjiong Zhu
The rise of online marketplaces has raised customer expectations regarding customization and lead time. It poses significant challenges to manufacturing firms and prompts a move from make-to-stock to a more flexible make-to-order system. Compared to make-to-stock settings, make-to-order systems cannot smooth fluctuations in demand using available stock. While viewing dynamic pricing as a useful strategy to balance supply with demand, many manufacturing firms can also create capacity flexibility. In that scenario, system costs could be cut by managing capacity and demand simultaneously. In this paper, we consider a make-to-order production environment with base and surge capacity as well as the ability to adjust product pricing. Our main focus is on operational decision-making, assuming that the base capacity and surge capacity are fixed, but activating the surge capacity incurs a setup cost. Initially, we propose a stochastic control model to reflect this complex decision problem. However, our initial model leads to an intractable dynamic programming problem. To overcome this, we convert the problem to a more tractable diffusion control problem. This approach helps to reveal the conditions under which utilizing flexible capacity is more advantageous than relying solely on fixed capacity. When flexible capacity is advantageous, we provide a solution to the diffusion control problem that can guide optimal capacity and price adjustments. We discover an interesting interplay between capacity adjustment and dynamic pricing. In particular, we find that the price, which aims at reducing congestion, may not monotonically increase with the congestion level when capacity adjustments incur a fixed cost.
{"title":"EXPRESS: Enhancing Make-to-Order Manufacturing Agility: When Flexible Capacity Meets Dynamic Pricing","authors":"X. Sun, Shiwei Chai, Anand A. Paul, Lingjiong Zhu","doi":"10.1177/10591478241249122","DOIUrl":"https://doi.org/10.1177/10591478241249122","url":null,"abstract":"The rise of online marketplaces has raised customer expectations regarding customization and lead time. It poses significant challenges to manufacturing firms and prompts a move from make-to-stock to a more flexible make-to-order system. Compared to make-to-stock settings, make-to-order systems cannot smooth fluctuations in demand using available stock. While viewing dynamic pricing as a useful strategy to balance supply with demand, many manufacturing firms can also create capacity flexibility. In that scenario, system costs could be cut by managing capacity and demand simultaneously. In this paper, we consider a make-to-order production environment with base and surge capacity as well as the ability to adjust product pricing. Our main focus is on operational decision-making, assuming that the base capacity and surge capacity are fixed, but activating the surge capacity incurs a setup cost. Initially, we propose a stochastic control model to reflect this complex decision problem. However, our initial model leads to an intractable dynamic programming problem. To overcome this, we convert the problem to a more tractable diffusion control problem. This approach helps to reveal the conditions under which utilizing flexible capacity is more advantageous than relying solely on fixed capacity. When flexible capacity is advantageous, we provide a solution to the diffusion control problem that can guide optimal capacity and price adjustments. We discover an interesting interplay between capacity adjustment and dynamic pricing. In particular, we find that the price, which aims at reducing congestion, may not monotonically increase with the congestion level when capacity adjustments incur a fixed cost.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140702302","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-12DOI: 10.1177/10591478241248751
T. Breugem, Yu Fan, Andreas K. Gernert, L. V. Van Wassenhove
Diversity, equity, and inclusion (DEI) are at the core of present-day health and humanitarian logistics. Aid organizations advocate inclusive people-centered approaches to ensure that affected communities receive appropriate aid in an effective and equitable way. Tensions and even conflicts can arise if affected communities perceive the distribution of aid as inequitable. These perceptions are driven by people’s so-called distributional preferences. These preferences are shaped by culture, social bonds, and experiences, and they describe how an individual’s well-being and behavior are impacted by potential inequalities. Their importance is increasingly recognized by aid organizations, but research on equity in health and humanitarian logistics remains focused on equal access and prioritizing needs. Using current examples from the Syrian and Rohingya refugee crises, we show the importance of recognizing and managing distributional preferences. Based on these examples and in line with DEI principles, we discuss several ways that we, as the operations community, can help conceptualize inclusive and people-centered approaches that account for distributional preferences.
{"title":"EXPRESS: Equity in Health and Humanitarian Logistics: a People-Centered Perspective","authors":"T. Breugem, Yu Fan, Andreas K. Gernert, L. V. Van Wassenhove","doi":"10.1177/10591478241248751","DOIUrl":"https://doi.org/10.1177/10591478241248751","url":null,"abstract":"Diversity, equity, and inclusion (DEI) are at the core of present-day health and humanitarian logistics. Aid organizations advocate inclusive people-centered approaches to ensure that affected communities receive appropriate aid in an effective and equitable way. Tensions and even conflicts can arise if affected communities perceive the distribution of aid as inequitable. These perceptions are driven by people’s so-called distributional preferences. These preferences are shaped by culture, social bonds, and experiences, and they describe how an individual’s well-being and behavior are impacted by potential inequalities. Their importance is increasingly recognized by aid organizations, but research on equity in health and humanitarian logistics remains focused on equal access and prioritizing needs. Using current examples from the Syrian and Rohingya refugee crises, we show the importance of recognizing and managing distributional preferences. Based on these examples and in line with DEI principles, we discuss several ways that we, as the operations community, can help conceptualize inclusive and people-centered approaches that account for distributional preferences.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140710539","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-12DOI: 10.1177/10591478241248749
Che-Wei Liu, Terence Saldanha, Sunil Mithas
How do digital skills influence individuals’ wages in contexts where caste-based and gender-based social stratification play an important role? We draw on sociology and economics literature to argue that the returns to digital skills in such contexts are shaped by caste and gender, and that digital skills empower disadvantaged individuals to increase their wages. Our empirical analysis of a rich micro-dataset on more than 20,000 individuals over two years of observations in India yields two key findings. First, we find that the positive returns to digital skills are greater for individuals from the Scheduled Castes and Scheduled Tribes in India than for individuals from other castes. Second, we find that the returns to digital skills are greater for women than for men. We also find that movement up the skilled occupation ladder is a mechanism that mediates the relationship between digital skills and wages. Our post hoc exploratory analyses suggest that among individuals from the lowest castes, the returns to digital skills are greater for women than for men, and that returns to digital skills are lower in regions with less developed infrastructure and lower literacy rates than in other regions. We discuss the implications of our findings for diversity, equity, and inclusion research in operations management.
{"title":"EXPRESS: Can Digital Skills Empower Disadvantaged Castes and Women? Evidence from India","authors":"Che-Wei Liu, Terence Saldanha, Sunil Mithas","doi":"10.1177/10591478241248749","DOIUrl":"https://doi.org/10.1177/10591478241248749","url":null,"abstract":"How do digital skills influence individuals’ wages in contexts where caste-based and gender-based social stratification play an important role? We draw on sociology and economics literature to argue that the returns to digital skills in such contexts are shaped by caste and gender, and that digital skills empower disadvantaged individuals to increase their wages. Our empirical analysis of a rich micro-dataset on more than 20,000 individuals over two years of observations in India yields two key findings. First, we find that the positive returns to digital skills are greater for individuals from the Scheduled Castes and Scheduled Tribes in India than for individuals from other castes. Second, we find that the returns to digital skills are greater for women than for men. We also find that movement up the skilled occupation ladder is a mechanism that mediates the relationship between digital skills and wages. Our post hoc exploratory analyses suggest that among individuals from the lowest castes, the returns to digital skills are greater for women than for men, and that returns to digital skills are lower in regions with less developed infrastructure and lower literacy rates than in other regions. We discuss the implications of our findings for diversity, equity, and inclusion research in operations management.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140709932","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-12DOI: 10.1177/10591478241248750
Dominic Loske, Matthias Klumpp, Jelle De Vries, Andrea D. Bührmann, Julia Giese, Joachim Lübke
Language system diversity is a source of individual differences. Research on human cognition has established that writing direction influences non-linguistic mental schemata such as spatial orientation. However, there is little empirical evidence of its impact on task performance. We examine whether task performance in manual order-picking is higher when the in-aisle travel direction follows the writing direction of order pickers. We conducted this study in cooperation with a German brick-and-mortar grocery retailer, allowing us to employ a unique real-world data set comprising 3,200,534 storage-location visits by 113 order pickers, 61 of whom had a left-to-right and 52 a right-to-left writing direction. Our statistical analyses suggest that order-picking task performance improves when the in-aisle travel direction follows individual writing direction. This creates a path to diversity-inspired operations management that treats efficiency and the diversity and inclusion of human workers as equally important for optimization.
{"title":"EXPRESS: The Impact of Writing Direction on Order Picking Performance: Empirical Evidence on Diversity and Efficiency in Operations Management","authors":"Dominic Loske, Matthias Klumpp, Jelle De Vries, Andrea D. Bührmann, Julia Giese, Joachim Lübke","doi":"10.1177/10591478241248750","DOIUrl":"https://doi.org/10.1177/10591478241248750","url":null,"abstract":"Language system diversity is a source of individual differences. Research on human cognition has established that writing direction influences non-linguistic mental schemata such as spatial orientation. However, there is little empirical evidence of its impact on task performance. We examine whether task performance in manual order-picking is higher when the in-aisle travel direction follows the writing direction of order pickers. We conducted this study in cooperation with a German brick-and-mortar grocery retailer, allowing us to employ a unique real-world data set comprising 3,200,534 storage-location visits by 113 order pickers, 61 of whom had a left-to-right and 52 a right-to-left writing direction. Our statistical analyses suggest that order-picking task performance improves when the in-aisle travel direction follows individual writing direction. This creates a path to diversity-inspired operations management that treats efficiency and the diversity and inclusion of human workers as equally important for optimization.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140710450","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-12DOI: 10.1177/10591478241248747
Xinyu Liang, Yixin (Iris) Wang, Jun Li
In theory, discretionary pricing enhances company performance by enabling managers to incorporate local information. However, in practice, managers may be prone to behavioral biases that can lead to sub-optimal decisions. This paper investigates the effectiveness of discretionary pricing and behavioral elements on pricing decisions via field and lab experiments. Collaborating with a pharmacy chain retailer, we first analyzed a field experiment that delegated pricing authority to store managers. We find that managers began engaging in discretionary pricing after two months of experiment implementation and tended to raise the prices of high-priced drugs, resulting in significant sales and revenue losses. This effect was particularly prominent among less experienced managers and in low-competition stores. We further designed a set of lab experiments to generalize our field observations and explore possible behavioral drivers. We requested lab participants to make pricing decisions under different information display scenarios and compared the average price adjustments between the direct display and click-to-view designs. We observe that participants also tended to raise product prices, and the magnitude of elevation was higher in the click-to-view group where the demand function information is less salient and accessible. Follow-up lab experiments support our field observations, suggesting that experience through repeated decisions and real-time feedback could alleviate the bias effect. Additionally, participants focused on high-priced products when given a list of items for discretionary pricing. Our results highlight the need to consider behavioral biases in human-algorithm collaborations and provide practical insights for improving information provision and training in discretionary settings.
{"title":"EXPRESS: Examining Behavioral Biases in Discretionary Pricing: Evidence from Field and Lab Experiments","authors":"Xinyu Liang, Yixin (Iris) Wang, Jun Li","doi":"10.1177/10591478241248747","DOIUrl":"https://doi.org/10.1177/10591478241248747","url":null,"abstract":"In theory, discretionary pricing enhances company performance by enabling managers to incorporate local information. However, in practice, managers may be prone to behavioral biases that can lead to sub-optimal decisions. This paper investigates the effectiveness of discretionary pricing and behavioral elements on pricing decisions via field and lab experiments. Collaborating with a pharmacy chain retailer, we first analyzed a field experiment that delegated pricing authority to store managers. We find that managers began engaging in discretionary pricing after two months of experiment implementation and tended to raise the prices of high-priced drugs, resulting in significant sales and revenue losses. This effect was particularly prominent among less experienced managers and in low-competition stores. We further designed a set of lab experiments to generalize our field observations and explore possible behavioral drivers. We requested lab participants to make pricing decisions under different information display scenarios and compared the average price adjustments between the direct display and click-to-view designs. We observe that participants also tended to raise product prices, and the magnitude of elevation was higher in the click-to-view group where the demand function information is less salient and accessible. Follow-up lab experiments support our field observations, suggesting that experience through repeated decisions and real-time feedback could alleviate the bias effect. Additionally, participants focused on high-priced products when given a list of items for discretionary pricing. Our results highlight the need to consider behavioral biases in human-algorithm collaborations and provide practical insights for improving information provision and training in discretionary settings.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140712279","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the challenges involved in production planning in coproduction systems, specifically the production of semiconductor chips for light-emitting diodes (LEDs). The production output in this industry is characterized by a stochastic distribution over the targeted production metric; thus the whole range of production is not suitable for a specific application. We formulate a novel stochastic profit optimization problem with random production output and random demand—based on information gleaned from interactions with a large integrated LED manufacturer—and determine the optimal production parameter setting and the batch size analytically; we solve the problem exactly in the special case of a single customer specification, and approximately in the case of an arbitrary number of customer specifications. We find that the optimal production setting depends on the sharpness of the density function governing the production output distribution and the range of parameter settings that are acceptable to customers. We show analytically that even under perfectly symmetric conditions, the optimal production setting is not necessarily symmetrically located with respect to the output range. We complement our analytical results with a Monte Carlo simulation of an augmented model with service level constraints. Our simulation results show that the approximate model that we develop serves as an excellent proxy for the intractable exact model, and illustrates the interplay between production output randomness, demand randomness, service levels, and production yield.
本文研究了共同生产系统中生产规划所面临的挑战，特别是发光二极管（LED）半导体芯片的生产。该行业的生产产出具有目标生产指标随机分布的特点，因此整个生产范围并不适合特定应用。我们根据从与一家大型集成 LED 制造商的互动中收集到的信息，提出了一个具有随机产量和随机需求的新型随机利润优化问题，并通过分析确定了最佳生产参数设置和批量大小；我们精确地解决了单一客户规格的特殊情况，并近似地解决了任意数量客户规格的情况。我们发现，最佳生产设置取决于管理生产产出分布的密度函数的尖锐程度，以及客户可接受的参数设置范围。我们通过分析表明，即使在完全对称的条件下，最优生产设置也不一定与产出范围对称。我们通过对带有服务水平约束的增强模型进行蒙特卡罗模拟，对分析结果进行了补充。我们的模拟结果表明，我们开发的近似模型可以很好地替代难以解决的精确模型，并说明了产量随机性、需求随机性、服务水平和产量之间的相互作用。
{"title":"Optimal Batch Size and Process Setting in Light-Emitting Diode (LED) Coproduction Processes","authors":"Vashkar Ghosh, Anand Paul, Zhechao Yang, Lingjiong Zhu","doi":"10.1177/10591478241238975","DOIUrl":"https://doi.org/10.1177/10591478241238975","url":null,"abstract":"This paper studies the challenges involved in production planning in coproduction systems, specifically the production of semiconductor chips for light-emitting diodes (LEDs). The production output in this industry is characterized by a stochastic distribution over the targeted production metric; thus the whole range of production is not suitable for a specific application. We formulate a novel stochastic profit optimization problem with random production output and random demand—based on information gleaned from interactions with a large integrated LED manufacturer—and determine the optimal production parameter setting and the batch size analytically; we solve the problem exactly in the special case of a single customer specification, and approximately in the case of an arbitrary number of customer specifications. We find that the optimal production setting depends on the sharpness of the density function governing the production output distribution and the range of parameter settings that are acceptable to customers. We show analytically that even under perfectly symmetric conditions, the optimal production setting is not necessarily symmetrically located with respect to the output range. We complement our analytical results with a Monte Carlo simulation of an augmented model with service level constraints. Our simulation results show that the approximate model that we develop serves as an excellent proxy for the intractable exact model, and illustrates the interplay between production output randomness, demand randomness, service levels, and production yield.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140752481","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-01DOI: 10.1177/10591478241246962
Shengming Zheng, Quan Zheng, A. Vakharia
This study examines how wholesale price discrimination (WD) by a supplier affects different parties in a supply chain involving a common supplier distributing homogeneous products through two competing retailers with different costs under wholesale price contracts. Especially, we allow for contract unobservability, where the contract terms between the supplier and each retailer are secret to the rival retailer. Intuitively, given the downstream asymmetry, WD should be more advantageous than the uniform wholesale price (UW) scheme for the supplier. This is true under observable contracts, as we show that WD benefits the supplier and less efficient retailer but hurts the more efficient retailer, supply chain, and consumers. Under unobservability, however, we find that the supplier may be better off by committing to UW. The intuition is that contract unobservability induces the supplier to set lower discretionary wholesale prices, which can outweigh the benefits of pricing flexibility. Consequently, a lack of commitment to UW can benefit both retailers, improve supply chain efficiency, and increase consumer surplus. Our findings suggest that policymakers should be cautious about imposing restrictions on WD. We also consider three extensions for robustness and offer new insights.
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