Problem definition: We model the development of effective agricultural supply chains (agri-chains) in emerging economies for better utilization of land and intermediate processing resources for harvested export-oriented goods. We study decisions made by farmers, intermediate processors, and government officials in agri-chains. The structure and management of supply chains and government minimum guaranteed prices to farmers affect the performance of these chains and are in the domain of our study. Methodology/results: We develop models of agricultural supply chains in which yields are correlated across regions, and farmers sell to competing capacitated processors. The models have two types of fundamental decisions: determining how much land to allocate for planting before the start of a growing season and, determining the prices offered by competing processors that purchase the harvest. We develop analytical results and algorithmic approaches for finding resulting equilibria that depend on the nature of decision making and on the structure of yield uncertainty. In particular, for all-or-nothing yields, we characterize the ranges of minimum guaranteed prices that lead to farmers’ no-production, under-production, full-production and over-production equilibria. Analytical results supported by numerical experiments allow us to conclude that appropriately setting minimum price guarantees, with the exact definition of such ranges dependent on agri-chain characteristics, can lead to first-best supply chain solutions. Managerial implications: The analysis also suggests that some farmer co-operation in land allocation or regional integration of farmer-processing assets, together with moderate minimum guaranteed prices, might be implementable pathways for achieving agri-chain efficiency in emerging economies. In an interesting result, farmlands with yields of positive correlation tend to inhibit over-production, whereas those with negative correlations tend to induce over-production. Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2022.0076 .
{"title":"Agricultural Supply Chains in Emerging Markets: Competition and Cooperation Under Correlated Yields","authors":"Jian Li, Panos Kouvelis, Maqbool Dada","doi":"10.1287/msom.2022.0076","DOIUrl":"https://doi.org/10.1287/msom.2022.0076","url":null,"abstract":"Problem definition: We model the development of effective agricultural supply chains (agri-chains) in emerging economies for better utilization of land and intermediate processing resources for harvested export-oriented goods. We study decisions made by farmers, intermediate processors, and government officials in agri-chains. The structure and management of supply chains and government minimum guaranteed prices to farmers affect the performance of these chains and are in the domain of our study. Methodology/results: We develop models of agricultural supply chains in which yields are correlated across regions, and farmers sell to competing capacitated processors. The models have two types of fundamental decisions: determining how much land to allocate for planting before the start of a growing season and, determining the prices offered by competing processors that purchase the harvest. We develop analytical results and algorithmic approaches for finding resulting equilibria that depend on the nature of decision making and on the structure of yield uncertainty. In particular, for all-or-nothing yields, we characterize the ranges of minimum guaranteed prices that lead to farmers’ no-production, under-production, full-production and over-production equilibria. Analytical results supported by numerical experiments allow us to conclude that appropriately setting minimum price guarantees, with the exact definition of such ranges dependent on agri-chain characteristics, can lead to first-best supply chain solutions. Managerial implications: The analysis also suggests that some farmer co-operation in land allocation or regional integration of farmer-processing assets, together with moderate minimum guaranteed prices, might be implementable pathways for achieving agri-chain efficiency in emerging economies. In an interesting result, farmlands with yields of positive correlation tend to inhibit over-production, whereas those with negative correlations tend to induce over-production. Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2022.0076 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"12 7","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134991266","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}
Problem definition: Probabilistic selling (PS) is a business model whereby, in addition to selling transparent products, a firm sells an opaque good, which is unknown to buyers until after purchase. We examine how PS affects retailer-manufacturer interactions in markets for physical goods and how upstream competition impacts channel members’ incentives to facilitate PS. Methodology/results: Using a Hotelling-based model of a multiproduct retailer, we find that a retailer maximizes its profit by assigning equal probability to each product even when the products have different wholesale prices. We also find that PS mitigates the inefficiencies caused by the double-marginalization problem. Although the potential benefit from PS is greater for a decentralized channel than for a centralized one, the market conditions for which PS arises are narrower for a decentralized channel. Furthermore, PS shifts channel power toward the manufacturer. However, it is possible for a win-win-win outcome to arise in which the manufacturer, retailer, and consumers benefit from PS. As expected, upstream competition shifts channel profit toward the retailer. However, competition also has surprising effects: It shrinks, rather than expands, the viability of PS and makes it possible for each manufacturer to benefit from its rival’s cost reduction. Managerial implications: A manufacturer should induce the retailer to offer an opaque good if its production costs are sufficiently low and the products are sufficiently close substitutes. It is optimal for the manufacturer to increase (decrease) its wholesale prices in response to the retailer’s ability to offer opaque goods if product differentiation is low (modest). Setting a wholesale price below cost sometimes maximizes a manufacturer’s profit. Furthermore, a retailer can achieve a strategic advantage by using products from multiple manufacturers to construct opaque goods. However, the retailer’s ability to leverage this advantage is curtailed because its use of equal-probability assignments relaxes competition between manufacturers. Funding: S. Fay acknowledges the financial support from the Earl V. Snyder Innovation Management Center and the Robert H. Brethen Operations Management Institute, Whitman School of Management, Syracuse University. Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2022.0158 .
问题定义:概率销售(Probabilistic selling, PS)是一种商业模式，在销售透明产品的同时，企业还销售一种不透明的商品，这种商品在购买者购买之前是未知的。我们研究了PS如何影响实体商品市场中零售商-制造商的互动，以及上游竞争如何影响渠道成员促进PS的激励。方法/结果:使用基于hotelling的多产品零售商模型，我们发现零售商通过为每种产品分配相同的概率来最大化其利润，即使产品具有不同的批发价格。我们还发现，PS缓解了双重边缘化问题带来的低效率。尽管对于去中心化渠道来说，PS的潜在好处比中心化渠道更大，但对于去中心化渠道来说，PS产生的市场条件更窄。此外，PS将渠道权力转移给制造商。然而，有可能出现三赢的结果，即制造商、零售商和消费者从PS中受益。正如预期的那样，上游竞争将渠道利润转移给零售商。然而，竞争也有令人惊讶的影响:它缩小了而不是扩大了PS的生存能力，使每个制造商都有可能从竞争对手的成本降低中受益。管理启示:如果生产成本足够低，并且产品是足够接近的替代品，制造商应该诱导零售商提供不透明的产品。如果产品差异化低(适度)，制造商提高(降低)其批发价格以响应零售商提供不透明商品的能力是最优的。把批发价定在成本以下有时能使制造商的利润最大化。此外，零售商可以通过使用来自多个制造商的产品来构建不透明商品来获得战略优势。然而，零售商利用这一优势的能力被削弱了，因为它使用等概率分配放松了制造商之间的竞争。资金:S. Fay感谢雪城大学惠特曼管理学院Earl V. Snyder创新管理中心和Robert H. Brethen运营管理研究所的资金支持。补充材料:电子伴侣可在https://doi.org/10.1287/msom.2022.0158上获得。
{"title":"The Effect of Probabilistic Selling on Channel Dynamics in Supply Chains","authors":"Scott Fay, Shahryar Gheibi","doi":"10.1287/msom.2022.0158","DOIUrl":"https://doi.org/10.1287/msom.2022.0158","url":null,"abstract":"Problem definition: Probabilistic selling (PS) is a business model whereby, in addition to selling transparent products, a firm sells an opaque good, which is unknown to buyers until after purchase. We examine how PS affects retailer-manufacturer interactions in markets for physical goods and how upstream competition impacts channel members’ incentives to facilitate PS. Methodology/results: Using a Hotelling-based model of a multiproduct retailer, we find that a retailer maximizes its profit by assigning equal probability to each product even when the products have different wholesale prices. We also find that PS mitigates the inefficiencies caused by the double-marginalization problem. Although the potential benefit from PS is greater for a decentralized channel than for a centralized one, the market conditions for which PS arises are narrower for a decentralized channel. Furthermore, PS shifts channel power toward the manufacturer. However, it is possible for a win-win-win outcome to arise in which the manufacturer, retailer, and consumers benefit from PS. As expected, upstream competition shifts channel profit toward the retailer. However, competition also has surprising effects: It shrinks, rather than expands, the viability of PS and makes it possible for each manufacturer to benefit from its rival’s cost reduction. Managerial implications: A manufacturer should induce the retailer to offer an opaque good if its production costs are sufficiently low and the products are sufficiently close substitutes. It is optimal for the manufacturer to increase (decrease) its wholesale prices in response to the retailer’s ability to offer opaque goods if product differentiation is low (modest). Setting a wholesale price below cost sometimes maximizes a manufacturer’s profit. Furthermore, a retailer can achieve a strategic advantage by using products from multiple manufacturers to construct opaque goods. However, the retailer’s ability to leverage this advantage is curtailed because its use of equal-probability assignments relaxes competition between manufacturers. Funding: S. Fay acknowledges the financial support from the Earl V. Snyder Innovation Management Center and the Robert H. Brethen Operations Management Institute, Whitman School of Management, Syracuse University. Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2022.0158 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"34 20","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135973540","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}
Lizeth Carolina Riascos-Álvarez, Merve Bodur, Dionne M. Aleman
Problem definition: Kidney paired donation programs allow patients registered with an incompatible donor to receive a suitable kidney from another donor, as long as the latter’s co-registered patient, if any, also receives a kidney from a different donor. The kidney exchange problem (KEP) aims to find an optimal collection of kidney exchanges taking the form of cycles and chains. Methodology/results: We develop the first decomposition method that is able to consider long cycles and long chains for projected large realistic instances. Particularly, we propose a branch-and-price framework in which the pricing problems are solved (for the first time in packing problems in a digraph) through multivalued decision diagrams. We present a new upper bound on the optimal value of the KEP, obtained via our master problem. Computational experiments show superior performance of our method over the state of the art by optimally solving almost all instances in the PrefLib library for multiple cycle and chain lengths. Managerial implications: Our algorithm also allows the prioritization of the solution composition, for example, chains over cycles or vice versa, and we conclude, similar to previous findings, that chains benefit the overall matching efficiency and highly sensitized patients. Funding: This work was supported by NSERC Discovery Grant (RGPIN-2021-02609). Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2022.0192 .
{"title":"A Branch-and-Price Algorithm Enhanced by Decision Diagrams for the Kidney Exchange Problem","authors":"Lizeth Carolina Riascos-Álvarez, Merve Bodur, Dionne M. Aleman","doi":"10.1287/msom.2022.0192","DOIUrl":"https://doi.org/10.1287/msom.2022.0192","url":null,"abstract":"Problem definition: Kidney paired donation programs allow patients registered with an incompatible donor to receive a suitable kidney from another donor, as long as the latter’s co-registered patient, if any, also receives a kidney from a different donor. The kidney exchange problem (KEP) aims to find an optimal collection of kidney exchanges taking the form of cycles and chains. Methodology/results: We develop the first decomposition method that is able to consider long cycles and long chains for projected large realistic instances. Particularly, we propose a branch-and-price framework in which the pricing problems are solved (for the first time in packing problems in a digraph) through multivalued decision diagrams. We present a new upper bound on the optimal value of the KEP, obtained via our master problem. Computational experiments show superior performance of our method over the state of the art by optimally solving almost all instances in the PrefLib library for multiple cycle and chain lengths. Managerial implications: Our algorithm also allows the prioritization of the solution composition, for example, chains over cycles or vice versa, and we conclude, similar to previous findings, that chains benefit the overall matching efficiency and highly sensitized patients. Funding: This work was supported by NSERC Discovery Grant (RGPIN-2021-02609). Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2022.0192 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"45 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136233440","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}
Antonio Cavallin Toscani, Atalay Atasu, Luk N. Van Wassenhove, Andrea Vinelli
Problem definition: We examine the environmental implications of shifting from in-person to virtual conference formats and identify the effects of such a shift on the value conferences provide to our societies. We extend work from other fields to present a more comprehensive comparison of the environmental impact and perceived value of different conference formats for the operations management/research communities. Methodology/results: We leverage a series of COVID-19–induced natural experiments to precisely evaluate the environmental footprint and societal value difference between in-person and virtual formats via life cycle assessment and survey techniques, respectively. Specifically, we focus on Institute for Operations Research and the Management Sciences, Production and Operations Management Society, and European Operations Management Association conferences that were conducted in both formats between 2019 and 2021. The environmental assessment reveals a huge impact reduction: for climate change, on average, from 941.9 kg CO 2eq per person for in-person formats to 1.0 for virtual. The value assessment emphasizes, instead, a detrimental utility loss with the overall perceived value derived from attendance moving—on a scale from 0 to 10—on average, from 7.9 to 4.0. When investigating the drivers of conference valuation, virtual formats show some merits, such as lower perceived costs and the added value of flexibility. The preference for in-person formats is unambiguous though, justified by the large performance gap related to socialization and networking, the two most important value drivers identified by our analysis. Managerial implications: These results highlight an inherent trade-off between virtual and in-person conferences. To overcome it, we discuss four strategies as to how our societies can reduce their environmental footprints and remain true to their essential purpose: (1) reduce in-person impact, (2) improve virtual design, (3) hybrid and decentralized formats, and (4) revise conferencing model and societies’ role. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0591 .
{"title":"In-Person or Virtual? What Will Operations Management/Research Conferences Look Like?","authors":"Antonio Cavallin Toscani, Atalay Atasu, Luk N. Van Wassenhove, Andrea Vinelli","doi":"10.1287/msom.2022.0591","DOIUrl":"https://doi.org/10.1287/msom.2022.0591","url":null,"abstract":"Problem definition: We examine the environmental implications of shifting from in-person to virtual conference formats and identify the effects of such a shift on the value conferences provide to our societies. We extend work from other fields to present a more comprehensive comparison of the environmental impact and perceived value of different conference formats for the operations management/research communities. Methodology/results: We leverage a series of COVID-19–induced natural experiments to precisely evaluate the environmental footprint and societal value difference between in-person and virtual formats via life cycle assessment and survey techniques, respectively. Specifically, we focus on Institute for Operations Research and the Management Sciences, Production and Operations Management Society, and European Operations Management Association conferences that were conducted in both formats between 2019 and 2021. The environmental assessment reveals a huge impact reduction: for climate change, on average, from 941.9 kg CO 2eq per person for in-person formats to 1.0 for virtual. The value assessment emphasizes, instead, a detrimental utility loss with the overall perceived value derived from attendance moving—on a scale from 0 to 10—on average, from 7.9 to 4.0. When investigating the drivers of conference valuation, virtual formats show some merits, such as lower perceived costs and the added value of flexibility. The preference for in-person formats is unambiguous though, justified by the large performance gap related to socialization and networking, the two most important value drivers identified by our analysis. Managerial implications: These results highlight an inherent trade-off between virtual and in-person conferences. To overcome it, we discuss four strategies as to how our societies can reduce their environmental footprints and remain true to their essential purpose: (1) reduce in-person impact, (2) improve virtual design, (3) hybrid and decentralized formats, and (4) revise conferencing model and societies’ role. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0591 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"15 11","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135111538","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}
Hongming Li, Erick Delage, Ning Zhu, Michael Pinedo, Shoufeng Ma
Problem definition: In this paper, we study a predisaster relief network design problem with uncertain demands. The aim is to determine the prepositioning and reallocation of relief supplies. Motivated by the call of the International Federation of Red Cross and Red Crescent Societies (IFRC) to leave no one behind, we consider three important practical aspects of humanitarian operations: shortages, equity, and uncertainty. Methodology/results: We first employ a form of robust satisficing measure, which we call the shortage severity measure, to evaluate the severity of the shortage caused by uncertain demand in a context with limited distribution information. Because shortages often raise concerns about equity, we then formulate a mixed-integer lexicographic optimization problem with nonconvex objectives and design a new branch-and-bound algorithm to identify the exact solution. We also propose two approaches for identifying optimal postdisaster adaptable resource reallocation: an exact approach and a conservative approximation that is more computationally efficient. Our case study considers the 2010 Yushu earthquake, which occurred in northwestern China, and demonstrates the value of our methodology in mitigating geographical inequities and reducing shortages. Managerial implications: In our case study, we show that (i) incorporating equity in both predisaster deployment and postdisaster reallocation can produce substantially more equitable shortage prevention strategies while sacrificing only a reasonable amount of total shortage; (ii) increasing donations/budgets may not necessarily alleviate the shortage suffered by the most vulnerable individuals if equity is not fully considered; and (iii) exploiting disaster magnitude information when quantifying uncertainty can help alleviate geographical inequities caused by uncertain relief demands. Funding: This work was supported by the Natural Sciences and Engineering Research Council of Canada [Grant RGPIN-2016-05208], the National Natural Science Foundation of China [Grants 71971154, 72010107004, 72091214, and 72122015], and the Canada Research Chairs [Grant CRC-2018-00105]. Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2023.1230 .
{"title":"Distributional Robustness and Inequity Mitigation in Disaster Preparedness of Humanitarian Operations","authors":"Hongming Li, Erick Delage, Ning Zhu, Michael Pinedo, Shoufeng Ma","doi":"10.1287/msom.2023.1230","DOIUrl":"https://doi.org/10.1287/msom.2023.1230","url":null,"abstract":"Problem definition: In this paper, we study a predisaster relief network design problem with uncertain demands. The aim is to determine the prepositioning and reallocation of relief supplies. Motivated by the call of the International Federation of Red Cross and Red Crescent Societies (IFRC) to leave no one behind, we consider three important practical aspects of humanitarian operations: shortages, equity, and uncertainty. Methodology/results: We first employ a form of robust satisficing measure, which we call the shortage severity measure, to evaluate the severity of the shortage caused by uncertain demand in a context with limited distribution information. Because shortages often raise concerns about equity, we then formulate a mixed-integer lexicographic optimization problem with nonconvex objectives and design a new branch-and-bound algorithm to identify the exact solution. We also propose two approaches for identifying optimal postdisaster adaptable resource reallocation: an exact approach and a conservative approximation that is more computationally efficient. Our case study considers the 2010 Yushu earthquake, which occurred in northwestern China, and demonstrates the value of our methodology in mitigating geographical inequities and reducing shortages. Managerial implications: In our case study, we show that (i) incorporating equity in both predisaster deployment and postdisaster reallocation can produce substantially more equitable shortage prevention strategies while sacrificing only a reasonable amount of total shortage; (ii) increasing donations/budgets may not necessarily alleviate the shortage suffered by the most vulnerable individuals if equity is not fully considered; and (iii) exploiting disaster magnitude information when quantifying uncertainty can help alleviate geographical inequities caused by uncertain relief demands. Funding: This work was supported by the Natural Sciences and Engineering Research Council of Canada [Grant RGPIN-2016-05208], the National Natural Science Foundation of China [Grants 71971154, 72010107004, 72091214, and 72122015], and the Canada Research Chairs [Grant CRC-2018-00105]. Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2023.1230 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"47 9","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135368636","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}
Problem definition: In a multistage model of a bilateral supply chain, we study two postponement strategies that the downstream retailer may adopt to mitigate the supply yield risk originating from the upstream production process. The retailer could either postpone the procurement payment until after the yield is realized and pay only for the delivered amount; postpone the pricing decision to better utilize the available supply; or do both. Although both strategies have been separately studied in literature, there is little research on their combined effect and system-wide implications in a decentralized setting. Methodology/results: Taking a game-theoretic approach, we formulate a Stackelberg game and solve for the equilibrium in four scenarios, respectively, in which the retailer uses different combinations of the postponement strategies. There are three main findings. First, when the production cost is low and the yield loss is highly likely, the retailer never strictly benefits from either postponement strategy; with relatively high production cost, the retailer is more likely to adopt payment, rather than pricing, postponement. Second, we uncover a situation where postponing payment and postponing pricing are strategic complements for the retailer. That is, the use of one strategy may increase the benefit of using the other. Third, we identify conditions under which the postponement strategies can be Pareto optimal to the entire supply chain, making the firms’ profits and the consumer surplus simultaneously higher. Managerial implications: These results can be applied in many practical settings to provide guidance for firms to better design the procurement contract and properly use marketing instrument (pricing) to effectively mitigate supply risk and increase profit. Funding: G. Xiao acknowledges financial support from the Research Grants Council of Hong Kong [General Research Fund Grant PolyU 15503920]. X. Guo acknowledges the support from the National Natural Science Foundation of China [Grant 72293564/72293560]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0198 .
{"title":"Supply Risk Mitigation in a Decentralized Supply Chain: Pricing Postponement or Payment Postponement?","authors":"Xin Geng, Xiaomeng Guo, Guang Xiao, Nan Yang","doi":"10.1287/msom.2022.0198","DOIUrl":"https://doi.org/10.1287/msom.2022.0198","url":null,"abstract":"Problem definition: In a multistage model of a bilateral supply chain, we study two postponement strategies that the downstream retailer may adopt to mitigate the supply yield risk originating from the upstream production process. The retailer could either postpone the procurement payment until after the yield is realized and pay only for the delivered amount; postpone the pricing decision to better utilize the available supply; or do both. Although both strategies have been separately studied in literature, there is little research on their combined effect and system-wide implications in a decentralized setting. Methodology/results: Taking a game-theoretic approach, we formulate a Stackelberg game and solve for the equilibrium in four scenarios, respectively, in which the retailer uses different combinations of the postponement strategies. There are three main findings. First, when the production cost is low and the yield loss is highly likely, the retailer never strictly benefits from either postponement strategy; with relatively high production cost, the retailer is more likely to adopt payment, rather than pricing, postponement. Second, we uncover a situation where postponing payment and postponing pricing are strategic complements for the retailer. That is, the use of one strategy may increase the benefit of using the other. Third, we identify conditions under which the postponement strategies can be Pareto optimal to the entire supply chain, making the firms’ profits and the consumer surplus simultaneously higher. Managerial implications: These results can be applied in many practical settings to provide guidance for firms to better design the procurement contract and properly use marketing instrument (pricing) to effectively mitigate supply risk and increase profit. Funding: G. Xiao acknowledges financial support from the Research Grants Council of Hong Kong [General Research Fund Grant PolyU 15503920]. X. Guo acknowledges the support from the National Natural Science Foundation of China [Grant 72293564/72293560]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0198 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135617293","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}
Problem definition: Quick response is a classic operations strategy that allows a retailer to place a rapid replenishment order during the selling season using information learned from early sales. The benefits of quick response are widely studied in the literature under the condition that the manufacturer’s wholesale prices are exogenously given. Motivated by the practice of emerging small and medium-sized enterprise (SME) fashion brands, this paper revisits the value of quick response for a retailer when a manufacturer can strategically set its wholesale prices. Methodology/results: We develop a game-theoretic model consisting of one manufacturer and one retailer. In contrast to the traditional quick response setting, the manufacturer can dynamically adjust wholesale prices for both regular and replenishment orders. First, we investigate whether and when quick response still benefits the retailer. We find that, under low or significantly high demand uncertainties, the firms share a common preferred ordering strategy, and quick response benefits the retailer as well as the supply chain. But, under moderately high demand uncertainty, the retailer’s favored ordering strategy conflicts with the manufacturer’s interest; as a result, the manufacturer would set wholesale prices to counter the retailer’s ordering strategy, which makes quick response detrimental to the retailer. Second, we search for mechanisms that can resolve this conflict and restore the beneficial effect of quick response. We show that letting the manufacturer commit to wholesale prices up front is ineffective in fixing the problem. However, if the retailer can propose a take-it-or-leave-it wholesale price for the replenishment order (possibly with the replenishment quantity) once the regular wholesale price is set, then quick response leads to a win–win outcome for both firms. Managerial implications: The findings caution retailers with weak power (e.g., SMEs) when adopting quick response, especially when facing moderately high demand uncertainties. The retailer, although weak, should be aware of the retailer’s natural ability to propose replenishment terms because, otherwise, the retailer can always forgo quick response; this opens up an opportunity to design more favorable arrangements. Funding: The work of J. Chen was supported by the National Natural Science Foundation of China [Grants 72171202, 72232007]; the work of Q. Hu was supported by the National Natural Science Foundation of China [Grants 72271057, 72091211]; the work of D. Shi was supported by the National Natural Science Foundation of China [Grant 72102205] and Shenzhen Stable Support Program for Higher Education Institutions; the work of F. Zhang was supported by the National Natural Science Foundation of China [Grants 71929201, 72131004]. Supplemental Material: The online supplement is available at https://doi.org/10.1287/msom.2021.0561 .
{"title":"Quick Response Under Strategic Manufacturer","authors":"Jiguang Chen, Qiying Hu, Duo Shi, Fuqiang Zhang","doi":"10.1287/msom.2021.0561","DOIUrl":"https://doi.org/10.1287/msom.2021.0561","url":null,"abstract":"Problem definition: Quick response is a classic operations strategy that allows a retailer to place a rapid replenishment order during the selling season using information learned from early sales. The benefits of quick response are widely studied in the literature under the condition that the manufacturer’s wholesale prices are exogenously given. Motivated by the practice of emerging small and medium-sized enterprise (SME) fashion brands, this paper revisits the value of quick response for a retailer when a manufacturer can strategically set its wholesale prices. Methodology/results: We develop a game-theoretic model consisting of one manufacturer and one retailer. In contrast to the traditional quick response setting, the manufacturer can dynamically adjust wholesale prices for both regular and replenishment orders. First, we investigate whether and when quick response still benefits the retailer. We find that, under low or significantly high demand uncertainties, the firms share a common preferred ordering strategy, and quick response benefits the retailer as well as the supply chain. But, under moderately high demand uncertainty, the retailer’s favored ordering strategy conflicts with the manufacturer’s interest; as a result, the manufacturer would set wholesale prices to counter the retailer’s ordering strategy, which makes quick response detrimental to the retailer. Second, we search for mechanisms that can resolve this conflict and restore the beneficial effect of quick response. We show that letting the manufacturer commit to wholesale prices up front is ineffective in fixing the problem. However, if the retailer can propose a take-it-or-leave-it wholesale price for the replenishment order (possibly with the replenishment quantity) once the regular wholesale price is set, then quick response leads to a win–win outcome for both firms. Managerial implications: The findings caution retailers with weak power (e.g., SMEs) when adopting quick response, especially when facing moderately high demand uncertainties. The retailer, although weak, should be aware of the retailer’s natural ability to propose replenishment terms because, otherwise, the retailer can always forgo quick response; this opens up an opportunity to design more favorable arrangements. Funding: The work of J. Chen was supported by the National Natural Science Foundation of China [Grants 72171202, 72232007]; the work of Q. Hu was supported by the National Natural Science Foundation of China [Grants 72271057, 72091211]; the work of D. Shi was supported by the National Natural Science Foundation of China [Grant 72102205] and Shenzhen Stable Support Program for Higher Education Institutions; the work of F. Zhang was supported by the National Natural Science Foundation of China [Grants 71929201, 72131004]. Supplemental Material: The online supplement is available at https://doi.org/10.1287/msom.2021.0561 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135992583","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}
Problem definition: Generating recommendations of compatible dating partners is a challenging task for online dating platforms because uncovering users’ idiosyncratic preferences is difficult. Thus, platforms tend to recommend popular users to others more frequently than unpopular users. This paper studies such popularity bias in an online dating platform’s recommendations and its consequences for users’ likelihood of finding dating partners. Methodology/results: Motivated by the empirical evidence that a user’s chance of being recommended by the platform’s algorithm increases significantly with the user’s popularity, we study an online dating platform’s incentive that generates popularity bias by modeling the platform’s recommendations and users’ subsequent interactions in a three-stage matching game. Our analysis shows that the recommendations that maximize the platform’s revenue and those that maximize the number of successful matches between users are not necessarily at odds, even though the former leads to a higher bias against unpopular users. Unbiased recommendations result in significantly lower revenue for the platform and fewer matches when users’ implicit cost of evaluating incoming messages is low. Popular users help the platform generate more revenue and a higher number of successful matches as long as these popular users do not become “out of reach.” We validate our theoretical results by running simulations of the platform based on a machine learning–based predictive model that estimates users’ behavior. Managerial implications: Our result indicates that an online dating platform can increase revenue and users’ chances of finding dating partners simultaneously with a certain degree of bias against unpopular users. Online dating platforms can use our theoretical results to understand user behavior and our predictive model to improve their recommendation systems (e.g., by selecting a set of users leading to the highest probabilities of matching or other revenue-generating interactions). Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2022.0132 .
{"title":"Popularity Bias in Online Dating Platforms: Theory and Empirical Evidence","authors":"Musa Eren Celdir, Soo-Haeng Cho, Elina H. Hwang","doi":"10.1287/msom.2022.0132","DOIUrl":"https://doi.org/10.1287/msom.2022.0132","url":null,"abstract":"Problem definition: Generating recommendations of compatible dating partners is a challenging task for online dating platforms because uncovering users’ idiosyncratic preferences is difficult. Thus, platforms tend to recommend popular users to others more frequently than unpopular users. This paper studies such popularity bias in an online dating platform’s recommendations and its consequences for users’ likelihood of finding dating partners. Methodology/results: Motivated by the empirical evidence that a user’s chance of being recommended by the platform’s algorithm increases significantly with the user’s popularity, we study an online dating platform’s incentive that generates popularity bias by modeling the platform’s recommendations and users’ subsequent interactions in a three-stage matching game. Our analysis shows that the recommendations that maximize the platform’s revenue and those that maximize the number of successful matches between users are not necessarily at odds, even though the former leads to a higher bias against unpopular users. Unbiased recommendations result in significantly lower revenue for the platform and fewer matches when users’ implicit cost of evaluating incoming messages is low. Popular users help the platform generate more revenue and a higher number of successful matches as long as these popular users do not become “out of reach.” We validate our theoretical results by running simulations of the platform based on a machine learning–based predictive model that estimates users’ behavior. Managerial implications: Our result indicates that an online dating platform can increase revenue and users’ chances of finding dating partners simultaneously with a certain degree of bias against unpopular users. Online dating platforms can use our theoretical results to understand user behavior and our predictive model to improve their recommendation systems (e.g., by selecting a set of users leading to the highest probabilities of matching or other revenue-generating interactions). Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2022.0132 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136032623","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}
Problem definition: A canonical model in service management assumes that consumers base the purchase of a service on its full price, that is, a linear combination of the monetary price and the expected time commitment. Although analytically convenient, when this assumption holds is an unexplored question. Methodology/results: We present a model of consumers allocating their time and money between working, overhead activities that do not provide utility, one continuous leisure activity, and one discrete service. Both continuous leisure activity and discrete service increase utility. Consumers can allocate any nonnegative amount of time or money to the leisure activity. Consumption of the discrete service requires a specific amount of time and money. We examine when the decision to purchase the discrete service depends only on its full price. We show that the full-price assumption does hold in specific cases. To be precise, it depends on how consumers are paid. If consumers completely control the amount of time that they work and earn a constant wage, they base their purchase decision on the full price. If, however, they must work a fixed shift length, then the assumption fails, and the full price is not sufficient to determine the consumer’s action. This leads to systematic differences in sellers’ strategies when they serve consumers with different compensation structures. If the consumers must work longer than would be optimal if they controlled their schedule and earned the same hourly wage, that is, the consumers are overemployed shift workers, then a seller restricts sales (relative to selling to consumers who control their work hours), and the system is less congested. The reverse holds if the consumers would prefer to work longer at the offered wage; that is, the consumers are underemployed shift workers. Managerial implications: We show that sellers who fail to take prevailing compensation structures of the community they serve into consideration experience significant revenue loss. In some cases, we see losses in consumer surplus and social welfare as well. Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2022.0357 .
{"title":"Is Full Price the Full Story When Consumers Have Time and Budget Constraints?","authors":"Simin Li, Martin A. Lariviere, Achal Bassamboo","doi":"10.1287/msom.2022.0357","DOIUrl":"https://doi.org/10.1287/msom.2022.0357","url":null,"abstract":"Problem definition: A canonical model in service management assumes that consumers base the purchase of a service on its full price, that is, a linear combination of the monetary price and the expected time commitment. Although analytically convenient, when this assumption holds is an unexplored question. Methodology/results: We present a model of consumers allocating their time and money between working, overhead activities that do not provide utility, one continuous leisure activity, and one discrete service. Both continuous leisure activity and discrete service increase utility. Consumers can allocate any nonnegative amount of time or money to the leisure activity. Consumption of the discrete service requires a specific amount of time and money. We examine when the decision to purchase the discrete service depends only on its full price. We show that the full-price assumption does hold in specific cases. To be precise, it depends on how consumers are paid. If consumers completely control the amount of time that they work and earn a constant wage, they base their purchase decision on the full price. If, however, they must work a fixed shift length, then the assumption fails, and the full price is not sufficient to determine the consumer’s action. This leads to systematic differences in sellers’ strategies when they serve consumers with different compensation structures. If the consumers must work longer than would be optimal if they controlled their schedule and earned the same hourly wage, that is, the consumers are overemployed shift workers, then a seller restricts sales (relative to selling to consumers who control their work hours), and the system is less congested. The reverse holds if the consumers would prefer to work longer at the offered wage; that is, the consumers are underemployed shift workers. Managerial implications: We show that sellers who fail to take prevailing compensation structures of the community they serve into consideration experience significant revenue loss. In some cases, we see losses in consumer surplus and social welfare as well. Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2022.0357 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"197 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136210107","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}
Athanasia Manou, Pelin G. Canbolat, Fikri Karaesmen
Problem definition: We consider pricing of services with strategic customers who have heterogeneous delay costs motivated by transportation systems. Customers are strategic decision makers who weigh the reward from the transport service against the waiting cost for the vehicle at a transportation station. Customers arrive at the station according to a Poisson process, and the vehicle visits the station according to a renewal process. We analyze the optimal price and the equilibrium for different levels of information available to customers. Methodology/results: We represent the service system as a stochastic clearing process, heterogeneity in delay cost as a random variable, and heterogeneity in rewards as a positive affine transformation of delay cost. For each information level, we identify the equilibrium behavior of customers and solve the revenue-maximization problem based on this equilibrium. The equilibrium turns out to be unique in each case, and it is of a threshold form in the sense that for each value of the information, it is best to join either for all types of customers, only for those who are sufficiently price sensitive, only for those who are sufficiently delay sensitive, or for none. The optimal fee is also unique in nontrivial cases. This enables us to perform comparisons across different information structures. Managerial implications: The effect of heterogeneity depends highly on model parameters as well as the available information. For a fixed fee, an increase in heterogeneity has a positive overall impact on the customer population, whereas the effect on the revenue can be positive (slow service at a high fee) or negative (fast service at a low fee). Unlike with fixed fee, for the optimal fee, an increase in heterogeneity can have a negative overall effect on customers. Ignoring heterogeneity can lead to a substantial opportunity loss for the system. Funding: A. Manou was supported by AXA Research Fund. P. G. Canbolat was supported by Marie Curie Career Integration Grant from the European Union’s Seventh Framework Programme (RISK) [FP7-PEOPLE-2013-CIG, Proposal No. 618853]. Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2021.0116 .
问题定义:我们考虑战略客户的服务定价，这些客户具有由运输系统驱动的异构延迟成本。顾客是战略决策者，他们权衡运输服务的回报与在运输站等待车辆的成本。客户按泊松流程到达站点，车辆按更新流程访问站点。我们分析了客户可获得的不同信息水平下的最优价格和均衡。方法/结果:我们将服务系统描述为一个随机清算过程，将延迟成本异质性描述为一个随机变量，将奖励异质性描述为延迟成本的正仿射变换。对于每一个信息层次，我们识别出顾客的均衡行为，并在此均衡基础上解决收益最大化问题。在每种情况下，均衡都是唯一的，并且在某种意义上，它是一个阈值形式，即对于信息的每个值，最好加入所有类型的客户，只加入那些对价格足够敏感的客户，只加入那些对延迟足够敏感的客户，或者不加入任何类型的客户。最优费用在非平凡情况下也是唯一的。这使我们能够跨不同的信息结构执行比较。管理意义:异质性的影响高度依赖于模型参数以及可用信息。对于固定费用，异质性的增加对客户群体有积极的总体影响，而对收入的影响可能是积极的(高费用的慢服务)或消极的(低费用的快速服务)。与固定费用不同，对于最优费用，异质性的增加可能对客户产生负面的总体影响。忽略异质性会导致系统失去大量的机会。资助:A. Manou由安盛研究基金资助。P. G. Canbolat得到了欧盟第七框架计划(RISK)的居里夫人职业整合基金的支持[FP7-PEOPLE-2013-CIG，提案号618853]。补充材料:电子伴侣可在https://doi.org/10.1287/msom.2021.0116上获得。
{"title":"Strategic Heterogeneous Customers in a Transportation Station: Information and Pricing","authors":"Athanasia Manou, Pelin G. Canbolat, Fikri Karaesmen","doi":"10.1287/msom.2021.0116","DOIUrl":"https://doi.org/10.1287/msom.2021.0116","url":null,"abstract":"Problem definition: We consider pricing of services with strategic customers who have heterogeneous delay costs motivated by transportation systems. Customers are strategic decision makers who weigh the reward from the transport service against the waiting cost for the vehicle at a transportation station. Customers arrive at the station according to a Poisson process, and the vehicle visits the station according to a renewal process. We analyze the optimal price and the equilibrium for different levels of information available to customers. Methodology/results: We represent the service system as a stochastic clearing process, heterogeneity in delay cost as a random variable, and heterogeneity in rewards as a positive affine transformation of delay cost. For each information level, we identify the equilibrium behavior of customers and solve the revenue-maximization problem based on this equilibrium. The equilibrium turns out to be unique in each case, and it is of a threshold form in the sense that for each value of the information, it is best to join either for all types of customers, only for those who are sufficiently price sensitive, only for those who are sufficiently delay sensitive, or for none. The optimal fee is also unique in nontrivial cases. This enables us to perform comparisons across different information structures. Managerial implications: The effect of heterogeneity depends highly on model parameters as well as the available information. For a fixed fee, an increase in heterogeneity has a positive overall impact on the customer population, whereas the effect on the revenue can be positive (slow service at a high fee) or negative (fast service at a low fee). Unlike with fixed fee, for the optimal fee, an increase in heterogeneity can have a negative overall effect on customers. Ignoring heterogeneity can lead to a substantial opportunity loss for the system. Funding: A. Manou was supported by AXA Research Fund. P. G. Canbolat was supported by Marie Curie Career Integration Grant from the European Union’s Seventh Framework Programme (RISK) [FP7-PEOPLE-2013-CIG, Proposal No. 618853]. Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2021.0116 .","PeriodicalId":49901,"journal":{"name":"M&som-Manufacturing & Service Operations Management","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136063668","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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