Pub Date : 2024-02-14DOI: 10.1177/10591478241235005
Ming Hu, Weixiang Huang, Chunhui Liu, Wenhui Zhou
To alleviate the financial shortage for public service provision, a government agency may jointly finance, own, and run a service system with a private firm (in the manner of a joint venture) or delegate service provision to the firm subject to regulation in service price or wait time. We model the service system as a queueing system in which customers are heterogeneous in service valuation and sensitive to price and delay. While the government aims to maximize social welfare, the firm's goal is to maximize profit. Hence, the joint venture has the objective of a mix of profit maximization and social welfare creation. Under the regulation, two types of interaction between the government and the firm, i.e., sequential move (in the absence of the government's myopic adjustment) and simultaneous move (in the presence of myopic adjustment), are considered. We find that while wait time regulation is more efficient than price regulation in the presence of myopic adjustment, the relationship is reversed in the absence of myopic adjustment. Somewhat surprisingly, price regulation with myopic adjustment may backfire. However, in some instances, the government must take a large share in a joint venture to achieve the same performance under price regulation without myopic adjustment. Our work uncovers whether the government adopts myopic adjustment plays a critical role in choosing the regulation instrument.
{"title":"EXPRESS: Regulation of Privatized Public Service Systems","authors":"Ming Hu, Weixiang Huang, Chunhui Liu, Wenhui Zhou","doi":"10.1177/10591478241235005","DOIUrl":"https://doi.org/10.1177/10591478241235005","url":null,"abstract":"To alleviate the financial shortage for public service provision, a government agency may jointly finance, own, and run a service system with a private firm (in the manner of a joint venture) or delegate service provision to the firm subject to regulation in service price or wait time. We model the service system as a queueing system in which customers are heterogeneous in service valuation and sensitive to price and delay. While the government aims to maximize social welfare, the firm's goal is to maximize profit. Hence, the joint venture has the objective of a mix of profit maximization and social welfare creation. Under the regulation, two types of interaction between the government and the firm, i.e., sequential move (in the absence of the government's myopic adjustment) and simultaneous move (in the presence of myopic adjustment), are considered. We find that while wait time regulation is more efficient than price regulation in the presence of myopic adjustment, the relationship is reversed in the absence of myopic adjustment. Somewhat surprisingly, price regulation with myopic adjustment may backfire. However, in some instances, the government must take a large share in a joint venture to achieve the same performance under price regulation without myopic adjustment. Our work uncovers whether the government adopts myopic adjustment plays a critical role in choosing the regulation instrument.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139836919","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 : 2024-02-14DOI: 10.1177/10591478241235004
M. Sodhi, Christopher S. Tang
In 2015, the United Nations countries signed up to achieve 17 Sustainable Development Goals (SDGs) for people, planet, prosperity, peace, and partnership by 2030. However, the trend of progress toward achieving these goals indicates that none of the 17 goals may be achieved by 2030 globally. We first provide a foundation for OM researchers to help shape the interventions for countries and companies to help achieve the SDGs by (1) identifying the synergies among the SDGs so that interventions can impact multiple SDGs positively and (2) linking some of the extant OM research with the synergies among the various SDGs. This way, researchers can understand the complexity of the challenges ahead and build on the OM research to influence the interventions of governments and organizations to maximize the attainment of the SDGs. We also provide some research opportunities to help OM researchers develop research agendas.
{"title":"EXPRESS: Seeking and Exploiting Synergies among the UN Sustainability Development Goals: Research Opportunities for Operations Management","authors":"M. Sodhi, Christopher S. Tang","doi":"10.1177/10591478241235004","DOIUrl":"https://doi.org/10.1177/10591478241235004","url":null,"abstract":"In 2015, the United Nations countries signed up to achieve 17 Sustainable Development Goals (SDGs) for people, planet, prosperity, peace, and partnership by 2030. However, the trend of progress toward achieving these goals indicates that none of the 17 goals may be achieved by 2030 globally. We first provide a foundation for OM researchers to help shape the interventions for countries and companies to help achieve the SDGs by (1) identifying the synergies among the SDGs so that interventions can impact multiple SDGs positively and (2) linking some of the extant OM research with the synergies among the various SDGs. This way, researchers can understand the complexity of the challenges ahead and build on the OM research to influence the interventions of governments and organizations to maximize the attainment of the SDGs. We also provide some research opportunities to help OM researchers develop research agendas.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139837166","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 : 2024-02-14DOI: 10.1177/10591478241234996
M. Jalili, Michael S. Pangburn, Alireza Yazdani
Fashion sellers are sometimes critiqued for selling products with low durability, resulting in waste. Blame is also directed at consumers, who purchase new fashions despite having accumulated a closet full of prior fashions. The “slow fashion” movement encourages sellers to produce more durable products, thus supporting less frequent purchases by consumers. We analyze a seller facing a market of consumers who differ in their sensitivity to fashion, in a setting where fashion changes over time. Using an infinite-time model and considering strategic consumer behavior, including their ability to accumulate a “closet” of varieties over time, we analyze the seller’s profit-maximizing price and product- durability decisions. We initially assume a static price but later analyze the potential profit gains from dynamic pricing. When analyzing a heterogeneous consumer market, we initially allow customers to vary (distributed uniformly) in their sensitivity to fashion. Subsequently, we explore alternative distributions for consumers’ fashion sensitivity and the correlation between their fashion sensitivities and product valuations. Using this framework, we show how the seller’s optimal price and durability decisions yield distinct shopping segments, which we refer to as the minimalist versus trend-chasing behaviors. We find that if the degree of fashion uncertainty is moderate, the seller’s optimal choice of product durability will support the coexistence of both behaviors. As the variety uncertainty expands, if the seller’s costs are sufficiently low, it will support a throwaway culture via disposable products. Otherwise, given high costs, the seller optimally targets a slow fashion-type outcome, with consumers targeting reuse (with durability) rather than variety. Our findings shed light on consumers’ optimal purchasing behaviors in relation to both market parameters and the firm’s pricing and durability decisions, and we show these findings remain robust relative to modeling perturbations.
{"title":"EXPRESS: Trend-Chasing versus Minimalism: Selling Fewer, Better Products to Fashion-Sensitive Customers","authors":"M. Jalili, Michael S. Pangburn, Alireza Yazdani","doi":"10.1177/10591478241234996","DOIUrl":"https://doi.org/10.1177/10591478241234996","url":null,"abstract":"Fashion sellers are sometimes critiqued for selling products with low durability, resulting in waste. Blame is also directed at consumers, who purchase new fashions despite having accumulated a closet full of prior fashions. The “slow fashion” movement encourages sellers to produce more durable products, thus supporting less frequent purchases by consumers. We analyze a seller facing a market of consumers who differ in their sensitivity to fashion, in a setting where fashion changes over time. Using an infinite-time model and considering strategic consumer behavior, including their ability to accumulate a “closet” of varieties over time, we analyze the seller’s profit-maximizing price and product- durability decisions. We initially assume a static price but later analyze the potential profit gains from dynamic pricing. When analyzing a heterogeneous consumer market, we initially allow customers to vary (distributed uniformly) in their sensitivity to fashion. Subsequently, we explore alternative distributions for consumers’ fashion sensitivity and the correlation between their fashion sensitivities and product valuations. Using this framework, we show how the seller’s optimal price and durability decisions yield distinct shopping segments, which we refer to as the minimalist versus trend-chasing behaviors. We find that if the degree of fashion uncertainty is moderate, the seller’s optimal choice of product durability will support the coexistence of both behaviors. As the variety uncertainty expands, if the seller’s costs are sufficiently low, it will support a throwaway culture via disposable products. Otherwise, given high costs, the seller optimally targets a slow fashion-type outcome, with consumers targeting reuse (with durability) rather than variety. Our findings shed light on consumers’ optimal purchasing behaviors in relation to both market parameters and the firm’s pricing and durability decisions, and we show these findings remain robust relative to modeling perturbations.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139837906","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 : 2024-02-14DOI: 10.1177/10591478241235002
Mark Brennan
The persistent inequities in American cities—long recognized and lived by black and Hispanic people and other minorities, the poor and working class, and others disadvantaged by urban systems—have been vaulted into the broader public consciousness over the past decade. Lessening entrenched urban inequalities is now at the top of the national policy agenda, suggesting a need and opportunity for more urban operations management. On what issues and how might this work occur? Operations management was deeply intertwined with urban planning in research and practice from the 1950s through the 1970s, at which point the fields diverged. To build a case for what perspectives and approaches a modern urban operations management agenda might employ to address inequity, I synthesize historical and contemporary planning theory with the debates among reflective operations scholars in the 1950s-1970s over work on cities. Modern operations scholars can look to planning, and especially to recent major shifts in its thinking on race and class, to address urban operations that disadvantage some city residents and overly advantage others. This urban operations agenda should be empirical, equity-oriented, and community-focused in order to best resonate with planners and the city residents they serve. In reengaging with planners to tackle the modern range of urban policy problems, operations analysts have a chance to contribute practical clarity on how cities work and can be made more livable for all residents.
{"title":"EXPRESS: Revisiting Equity in Urban Operations Management 50 Years Later: What Do City Planners Have to Say?","authors":"Mark Brennan","doi":"10.1177/10591478241235002","DOIUrl":"https://doi.org/10.1177/10591478241235002","url":null,"abstract":"The persistent inequities in American cities—long recognized and lived by black and Hispanic people and other minorities, the poor and working class, and others disadvantaged by urban systems—have been vaulted into the broader public consciousness over the past decade. Lessening entrenched urban inequalities is now at the top of the national policy agenda, suggesting a need and opportunity for more urban operations management. On what issues and how might this work occur? Operations management was deeply intertwined with urban planning in research and practice from the 1950s through the 1970s, at which point the fields diverged. To build a case for what perspectives and approaches a modern urban operations management agenda might employ to address inequity, I synthesize historical and contemporary planning theory with the debates among reflective operations scholars in the 1950s-1970s over work on cities. Modern operations scholars can look to planning, and especially to recent major shifts in its thinking on race and class, to address urban operations that disadvantage some city residents and overly advantage others. This urban operations agenda should be empirical, equity-oriented, and community-focused in order to best resonate with planners and the city residents they serve. In reengaging with planners to tackle the modern range of urban policy problems, operations analysts have a chance to contribute practical clarity on how cities work and can be made more livable for all residents.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139777988","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 : 2024-02-14DOI: 10.1177/10591478241234999
Erin C. McKie, Aravind Chandrasekaran, Sriram Venkataraman
Much of the responsibility for advancing the circular economy has been directed towards firms, yet many reuse opportunities can only be achieved through environmentally compliant, household-level recycling behaviors. In response, policymakers and recycling organizations are using a range of feedback mechanisms to promote household recycling that meets local quality standards. However, the effectiveness of these tactics remains unclear, and stakeholders are divided on the appropriateness of their use. In this research, we examine the role of two popular feedback mechanisms - information-only and information plus penalty - in correcting households' curbside recycling behaviors. With information-only feedback, households are provided with best practices for recycling and are not penalized for their errors. With information plus penalty feedback, households also receive information, but temporarily forfeit their recycling services. While previous studies have explored the use of information and penalties as feedback mechanisms to guide behavioral changes, there is mixed evidence on their effectiveness, particularly in the recycling context. We address this research gap by analyzing unique data collected from a 2019 curbside auditing effort that occurred in a large, Mid-Western city. Our analysis leverages econometric methods, and recycling feedback and performance data from 25,359 audits across 11,899 households and 15 recycling routes. We find that information-only feedback mechanisms, while preferred by some stakeholders, are not associated with improvements in recycling quality (measured using household contamination rates). By contrast, our results indicate that punitive mechanisms (i.e., information plus penalty) involving cart refusals are associated with significant reductions in contamination rates: i.e., households that receive punitive feedback reduce their contamination rate severity by 59%, and are 75% less likely to commit a violation in the future. More importantly, we do not find evidence that punitive feedback mechanisms generally discourage households' participation in recycling programs (measured using future set out rates). Our study informs sustainable operations management literature by investigating how curbside feedback mechanisms, with differing levels of severity, influence critical dimensions of households' recycling performance (i.e., recycling quality and participation). We also inform policymakers on how curb- side feedback mechanisms can be more effectively leveraged to enhance opportunities for material reuse.
{"title":"EXPRESS: How Do Curbside Feedback Tactics Impact Households' Recycling Performance? Evidence from Community Programs","authors":"Erin C. McKie, Aravind Chandrasekaran, Sriram Venkataraman","doi":"10.1177/10591478241234999","DOIUrl":"https://doi.org/10.1177/10591478241234999","url":null,"abstract":"Much of the responsibility for advancing the circular economy has been directed towards firms, yet many reuse opportunities can only be achieved through environmentally compliant, household-level recycling behaviors. In response, policymakers and recycling organizations are using a range of feedback mechanisms to promote household recycling that meets local quality standards. However, the effectiveness of these tactics remains unclear, and stakeholders are divided on the appropriateness of their use. In this research, we examine the role of two popular feedback mechanisms - information-only and information plus penalty - in correcting households' curbside recycling behaviors. With information-only feedback, households are provided with best practices for recycling and are not penalized for their errors. With information plus penalty feedback, households also receive information, but temporarily forfeit their recycling services. While previous studies have explored the use of information and penalties as feedback mechanisms to guide behavioral changes, there is mixed evidence on their effectiveness, particularly in the recycling context. We address this research gap by analyzing unique data collected from a 2019 curbside auditing effort that occurred in a large, Mid-Western city. Our analysis leverages econometric methods, and recycling feedback and performance data from 25,359 audits across 11,899 households and 15 recycling routes. We find that information-only feedback mechanisms, while preferred by some stakeholders, are not associated with improvements in recycling quality (measured using household contamination rates). By contrast, our results indicate that punitive mechanisms (i.e., information plus penalty) involving cart refusals are associated with significant reductions in contamination rates: i.e., households that receive punitive feedback reduce their contamination rate severity by 59%, and are 75% less likely to commit a violation in the future. More importantly, we do not find evidence that punitive feedback mechanisms generally discourage households' participation in recycling programs (measured using future set out rates). Our study informs sustainable operations management literature by investigating how curbside feedback mechanisms, with differing levels of severity, influence critical dimensions of households' recycling performance (i.e., recycling quality and participation). We also inform policymakers on how curb- side feedback mechanisms can be more effectively leveraged to enhance opportunities for material reuse.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139778062","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 : 2024-02-14DOI: 10.1177/10591478241234994
Chenguang (Allen) Wu, Chen Jin, Ying-Ju Chen
This work is motivated by the practice of add-on services, where an add-on is not valuable unless purchased with a main service. Discrepancies in pricing have been observed in various settings such as restaurants, museums, and attractions regarding whether the add-on should be sold together with the main service, or separately from the main service at an additional charge. While there has been a vast literature on add-on pricing, its application in service-oriented businesses with congestion-prone externalities and delay-sensitive customers is less understood. We develop a queueing model and examine the optimal pricing of add-on services in such systems, and in line with practice, we focus on analyzing two pricing schemes: bundling that charges a single price to sell main and add-on services altogether, and separate selling that charges distinct prices for each service. We establish that in the absence of congestion, separate selling strictly dominates bundling across the board. When there is congestion at the main service but not the add-on, bundling can be more lucrative under a large customer demand. When congestion takes place at both services, separate selling can return to being dominant under a large customer demand. We explain these plots of reversals by illustrating an intricate interplay between pricing, market coverage, and congestion. Collectively, they reveal novel operational advantages of each pricing scheme in exploiting the fundamentals of add-on structures.
{"title":"EXPRESS: Add-On Pricing: a Queueing Perspective","authors":"Chenguang (Allen) Wu, Chen Jin, Ying-Ju Chen","doi":"10.1177/10591478241234994","DOIUrl":"https://doi.org/10.1177/10591478241234994","url":null,"abstract":"This work is motivated by the practice of add-on services, where an add-on is not valuable unless purchased with a main service. Discrepancies in pricing have been observed in various settings such as restaurants, museums, and attractions regarding whether the add-on should be sold together with the main service, or separately from the main service at an additional charge. While there has been a vast literature on add-on pricing, its application in service-oriented businesses with congestion-prone externalities and delay-sensitive customers is less understood. We develop a queueing model and examine the optimal pricing of add-on services in such systems, and in line with practice, we focus on analyzing two pricing schemes: bundling that charges a single price to sell main and add-on services altogether, and separate selling that charges distinct prices for each service. We establish that in the absence of congestion, separate selling strictly dominates bundling across the board. When there is congestion at the main service but not the add-on, bundling can be more lucrative under a large customer demand. When congestion takes place at both services, separate selling can return to being dominant under a large customer demand. We explain these plots of reversals by illustrating an intricate interplay between pricing, market coverage, and congestion. Collectively, they reveal novel operational advantages of each pricing scheme in exploiting the fundamentals of add-on structures.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139777725","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 : 2024-02-14DOI: 10.1177/10591478241235000
Qian Cheng, N. T. Argon, Christopher S. Evans, Peter Lin, B. Linthicum, Yufeng Liu, Abhi Mehrotra, Mehul D. Patel, S. Ziya
We investigate the presence of health disparities in emergency department (ED) disposition decisions and if crowding levels might have an exacerbating role. Using data from a large, academic Emergency Department (ED), we find statistically significant associations between ED disposition decisions and patient sex, race, as well as ethnicity, with male, Caucasian, and non-Hispanic patients being more likely to be admitted to the hospital compared with respectively, female, African-American, and Hispanic patients. In line with earlier findings in other studies, we find that longer waiting times, suggesting higher levels of ED crowding, is associated with higher rates of admission. Moreover, longer ED wait times modified sex differences, suggesting that the disposition disparity in female patients might be exacerbated when the ED is more crowded.
{"title":"EXPRESS: An Investigation into Demographic Disparities in Emergency Department Disposition Decisions","authors":"Qian Cheng, N. T. Argon, Christopher S. Evans, Peter Lin, B. Linthicum, Yufeng Liu, Abhi Mehrotra, Mehul D. Patel, S. Ziya","doi":"10.1177/10591478241235000","DOIUrl":"https://doi.org/10.1177/10591478241235000","url":null,"abstract":"We investigate the presence of health disparities in emergency department (ED) disposition decisions and if crowding levels might have an exacerbating role. Using data from a large, academic Emergency Department (ED), we find statistically significant associations between ED disposition decisions and patient sex, race, as well as ethnicity, with male, Caucasian, and non-Hispanic patients being more likely to be admitted to the hospital compared with respectively, female, African-American, and Hispanic patients. In line with earlier findings in other studies, we find that longer waiting times, suggesting higher levels of ED crowding, is associated with higher rates of admission. Moreover, longer ED wait times modified sex differences, suggesting that the disposition disparity in female patients might be exacerbated when the ED is more crowded.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139778091","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}
Many firms that offer home delivery of products purchased online now provide consumers the option of subscribing to a membership plan for free delivery of limited or unlimited number of orders instead of customers paying delivery charges for each order. This paper seeks to understand the benefits to firms and consumers of introducing such free-delivery subscription (FDS) plans to complement their traditional pay-for-delivery (PFD) option, characterize the firm's optimal FDS subscription pricing strategy, and study the effects of product, consumer, and market characteristics on the subscription fees and firm's profits. We develop and analyze an economic model that incorporates salient features of product delivery settings that prior models of subscription pricing do not fully capture. The features include simultaneous availability of PFD and FDS options, lift in a consumer's demand when she switches from PFD to FDS, the possibility of attracting new consumers when the firm introduces FDS, and order batching by customers due to per-order delivery charges and free-delivery order allowances. Our utility-based approach to model consumers' purchasing choices incorporates consumer heterogeneity both in terms of their utility for the product and their shopping preference under the PFD option. For homogeneous consumers, we show that introducing a FDS plan raises the firm's profit, establish the optimality of offering unlimited free-delivery allowance, and analyze comparative statics. With multiple customer types, our analysis of two subscription pricing strategies for FDS plans – a single “Universal” plan and multiple “Tiered” plans with varying subscription fees and free-delivery limits – leads to several interesting insights on delivery pricing strategies, as well as drivers and sensitivity of the optimal policy, profits, and number of subscribers. We supplement this analysis with extensive computational experiments that reveal a substantial increase in profits when a firm adds one or more FDS plans to its PFD option even though the optimal subscription fee(s) only covers part of the firm's actual shipping costs. These results also permit us to gauge the influence and understand the trends in the profitability of the Universal and Tiered plans as various parameters change.
{"title":"EXPRESS: Subscription Pricing for Free Delivery Services","authors":"Anantaram Balakrishnan, Shankar Sundaresan, Chinmoy Mohapatra","doi":"10.1177/10591478241235001","DOIUrl":"https://doi.org/10.1177/10591478241235001","url":null,"abstract":"Many firms that offer home delivery of products purchased online now provide consumers the option of subscribing to a membership plan for free delivery of limited or unlimited number of orders instead of customers paying delivery charges for each order. This paper seeks to understand the benefits to firms and consumers of introducing such free-delivery subscription (FDS) plans to complement their traditional pay-for-delivery (PFD) option, characterize the firm's optimal FDS subscription pricing strategy, and study the effects of product, consumer, and market characteristics on the subscription fees and firm's profits. We develop and analyze an economic model that incorporates salient features of product delivery settings that prior models of subscription pricing do not fully capture. The features include simultaneous availability of PFD and FDS options, lift in a consumer's demand when she switches from PFD to FDS, the possibility of attracting new consumers when the firm introduces FDS, and order batching by customers due to per-order delivery charges and free-delivery order allowances. Our utility-based approach to model consumers' purchasing choices incorporates consumer heterogeneity both in terms of their utility for the product and their shopping preference under the PFD option. For homogeneous consumers, we show that introducing a FDS plan raises the firm's profit, establish the optimality of offering unlimited free-delivery allowance, and analyze comparative statics. With multiple customer types, our analysis of two subscription pricing strategies for FDS plans – a single “Universal” plan and multiple “Tiered” plans with varying subscription fees and free-delivery limits – leads to several interesting insights on delivery pricing strategies, as well as drivers and sensitivity of the optimal policy, profits, and number of subscribers. We supplement this analysis with extensive computational experiments that reveal a substantial increase in profits when a firm adds one or more FDS plans to its PFD option even though the optimal subscription fee(s) only covers part of the firm's actual shipping costs. These results also permit us to gauge the influence and understand the trends in the profitability of the Universal and Tiered plans as various parameters change.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139836849","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 : 2024-02-14DOI: 10.1177/10591478241234999
Erin C. McKie, Aravind Chandrasekaran, Sriram Venkataraman
Much of the responsibility for advancing the circular economy has been directed towards firms, yet many reuse opportunities can only be achieved through environmentally compliant, household-level recycling behaviors. In response, policymakers and recycling organizations are using a range of feedback mechanisms to promote household recycling that meets local quality standards. However, the effectiveness of these tactics remains unclear, and stakeholders are divided on the appropriateness of their use. In this research, we examine the role of two popular feedback mechanisms - information-only and information plus penalty - in correcting households' curbside recycling behaviors. With information-only feedback, households are provided with best practices for recycling and are not penalized for their errors. With information plus penalty feedback, households also receive information, but temporarily forfeit their recycling services. While previous studies have explored the use of information and penalties as feedback mechanisms to guide behavioral changes, there is mixed evidence on their effectiveness, particularly in the recycling context. We address this research gap by analyzing unique data collected from a 2019 curbside auditing effort that occurred in a large, Mid-Western city. Our analysis leverages econometric methods, and recycling feedback and performance data from 25,359 audits across 11,899 households and 15 recycling routes. We find that information-only feedback mechanisms, while preferred by some stakeholders, are not associated with improvements in recycling quality (measured using household contamination rates). By contrast, our results indicate that punitive mechanisms (i.e., information plus penalty) involving cart refusals are associated with significant reductions in contamination rates: i.e., households that receive punitive feedback reduce their contamination rate severity by 59%, and are 75% less likely to commit a violation in the future. More importantly, we do not find evidence that punitive feedback mechanisms generally discourage households' participation in recycling programs (measured using future set out rates). Our study informs sustainable operations management literature by investigating how curbside feedback mechanisms, with differing levels of severity, influence critical dimensions of households' recycling performance (i.e., recycling quality and participation). We also inform policymakers on how curb- side feedback mechanisms can be more effectively leveraged to enhance opportunities for material reuse.
{"title":"EXPRESS: How Do Curbside Feedback Tactics Impact Households' Recycling Performance? Evidence from Community Programs","authors":"Erin C. McKie, Aravind Chandrasekaran, Sriram Venkataraman","doi":"10.1177/10591478241234999","DOIUrl":"https://doi.org/10.1177/10591478241234999","url":null,"abstract":"Much of the responsibility for advancing the circular economy has been directed towards firms, yet many reuse opportunities can only be achieved through environmentally compliant, household-level recycling behaviors. In response, policymakers and recycling organizations are using a range of feedback mechanisms to promote household recycling that meets local quality standards. However, the effectiveness of these tactics remains unclear, and stakeholders are divided on the appropriateness of their use. In this research, we examine the role of two popular feedback mechanisms - information-only and information plus penalty - in correcting households' curbside recycling behaviors. With information-only feedback, households are provided with best practices for recycling and are not penalized for their errors. With information plus penalty feedback, households also receive information, but temporarily forfeit their recycling services. While previous studies have explored the use of information and penalties as feedback mechanisms to guide behavioral changes, there is mixed evidence on their effectiveness, particularly in the recycling context. We address this research gap by analyzing unique data collected from a 2019 curbside auditing effort that occurred in a large, Mid-Western city. Our analysis leverages econometric methods, and recycling feedback and performance data from 25,359 audits across 11,899 households and 15 recycling routes. We find that information-only feedback mechanisms, while preferred by some stakeholders, are not associated with improvements in recycling quality (measured using household contamination rates). By contrast, our results indicate that punitive mechanisms (i.e., information plus penalty) involving cart refusals are associated with significant reductions in contamination rates: i.e., households that receive punitive feedback reduce their contamination rate severity by 59%, and are 75% less likely to commit a violation in the future. More importantly, we do not find evidence that punitive feedback mechanisms generally discourage households' participation in recycling programs (measured using future set out rates). Our study informs sustainable operations management literature by investigating how curbside feedback mechanisms, with differing levels of severity, influence critical dimensions of households' recycling performance (i.e., recycling quality and participation). We also inform policymakers on how curb- side feedback mechanisms can be more effectively leveraged to enhance opportunities for material reuse.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139837689","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 : 2024-02-14DOI: 10.1177/10591478241234994
Chenguang (Allen) Wu, Chen Jin, Ying-Ju Chen
This work is motivated by the practice of add-on services, where an add-on is not valuable unless purchased with a main service. Discrepancies in pricing have been observed in various settings such as restaurants, museums, and attractions regarding whether the add-on should be sold together with the main service, or separately from the main service at an additional charge. While there has been a vast literature on add-on pricing, its application in service-oriented businesses with congestion-prone externalities and delay-sensitive customers is less understood. We develop a queueing model and examine the optimal pricing of add-on services in such systems, and in line with practice, we focus on analyzing two pricing schemes: bundling that charges a single price to sell main and add-on services altogether, and separate selling that charges distinct prices for each service. We establish that in the absence of congestion, separate selling strictly dominates bundling across the board. When there is congestion at the main service but not the add-on, bundling can be more lucrative under a large customer demand. When congestion takes place at both services, separate selling can return to being dominant under a large customer demand. We explain these plots of reversals by illustrating an intricate interplay between pricing, market coverage, and congestion. Collectively, they reveal novel operational advantages of each pricing scheme in exploiting the fundamentals of add-on structures.
{"title":"EXPRESS: Add-On Pricing: a Queueing Perspective","authors":"Chenguang (Allen) Wu, Chen Jin, Ying-Ju Chen","doi":"10.1177/10591478241234994","DOIUrl":"https://doi.org/10.1177/10591478241234994","url":null,"abstract":"This work is motivated by the practice of add-on services, where an add-on is not valuable unless purchased with a main service. Discrepancies in pricing have been observed in various settings such as restaurants, museums, and attractions regarding whether the add-on should be sold together with the main service, or separately from the main service at an additional charge. While there has been a vast literature on add-on pricing, its application in service-oriented businesses with congestion-prone externalities and delay-sensitive customers is less understood. We develop a queueing model and examine the optimal pricing of add-on services in such systems, and in line with practice, we focus on analyzing two pricing schemes: bundling that charges a single price to sell main and add-on services altogether, and separate selling that charges distinct prices for each service. We establish that in the absence of congestion, separate selling strictly dominates bundling across the board. When there is congestion at the main service but not the add-on, bundling can be more lucrative under a large customer demand. When congestion takes place at both services, separate selling can return to being dominant under a large customer demand. We explain these plots of reversals by illustrating an intricate interplay between pricing, market coverage, and congestion. Collectively, they reveal novel operational advantages of each pricing scheme in exploiting the fundamentals of add-on structures.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":5.0,"publicationDate":"2024-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139837597","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}
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