Department of Information Systems & Operations Management
Decision Sciences Journal
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- Decision Sciences Awards 2013 - Best Paper, Outstanding SEs, AEs, and Reviewers
- Call for Papers: Exploring Innovations in Global Supply Chain Networks - Submission deadline: September 15, 2014
- Decision Sciences Top 100 cited articles, 2002-2012
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- Spring 2012 Decision Sciences Newsletter
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- Decision Sciences Awards 2011 - Best Paper and Honorable Mentions, Outstanding AEs, and Outstanding Reviewers
- 2010 Impact Factor Places Decision Sciences Among Best Journals - once again!
- Decision Sciences Best Article Award for 2010
- Decision Sciences Outstanding Associate Editors Award for 2010
- 2009 Citation Impact Factor Places Decision Sciences Among Very Best Journals
(Issues 44-6 and later)
|Damien Power, Robert Klassen, Thomas Kull, and Dayna Simpson||
Competitive Goals and Plant Investment in Environment and Safety Practices: Moderating Effect of National Culture
Abstract:Operations managers clearly play a critical role in targeting plant-level investments toward environment and safety practices. In principle, a “rational” response would be to align this investment with senior management’s competitive goals for operational performance. However, operations managers also are influenced by contingent factors, such as their national culture, thus creating potential tension that might bias investment away from a simple rational response. Using data from 1453 plants in 24 countries, we test the moderating influence of seven of the national cultural characteristics on investment at the plant level in environment and safety practices. Four of the seven national cultural characteristics from GLOBE (i.e., uncertainty avoidance, in-group collectivism, future orientation and performance orientation) shifted investment away from an expected “rational” response. Positive bias was evident when the national culture favoured consistency and formalized procedures and rewarded performance improvement. In contrast, managers exhibited negative bias when familial groups and local coalitions were powerful, or future outcomes – rather than current actions – were more important. Overall, this study highlights the critical importance of moving beyond a naïve expectation that plant-level investment will naturally align with corporate competitive goals for environment and safety. Instead, the national culture where the plant is located will influence these investments, and must be taken into account by senior management.
|Yoon Hee Kim and Urban Wemmerlov||
Does a Supplier’s Operational Competence Translate into Financial Performance? An Empirical Analysis of Supplier-Customer Relationships
Abstract:We conduct an empirical investigation of how a supplier’s operational competence, as reflected by outcomes in the areas of quality, cost, delivery, flexibility and new product development, translates into financial gains from a key customer. In contrast to previous research directed at the firm level, this study focuses on the supplier-customer relationship level. Using survey data from 158 suppliers in the manufacturing industry, we perform structural equation modeling to map out the paths from operational competence to financial performance – via dependencies and cooperative behaviors between suppliers and their customers. This study is the first scholarly attempt to examine the link between suppliers’ operational competencies and financial performance in inter-organizational relationships. It is also an early investigation into operational competence as a source of bi-lateral dependence. Our findings show that the supplier’s operational competences increase its customer’s dependence by enhancing the value of its products/services. However, the resulting increase in the supplier’s power is not leveraged to shape relationship behaviors or capture value from its customer. In contrast, the customer’s existing power as a major buyer plays an important role in shaping cooperative behaviors and affecting the supplier’s financial performance from the customer relationship.
|Hong Guo, Praveen Pathak, and Kenny Cheng||
Estimating Social Influences from Social Networking Sites – Articulated Friendships versus Communication Interactions
Abstract:Despite the ubiquity of social networking sites, the online social networking industry is in search of effective marketing strategies to better profit from their established user base. Social media marketing strategies build on the premise that the social network of online users can be predicted and social influences among online users can be estimated. However, the existence of various heterogeneous social interactions on social networking sites presents a challenge for social network prediction and social influence estimation. In this paper we draw upon the literatures on self-presentation on social networking sites and signaling in online social networking to categorize six heterogeneous online social interactions on social networking sites into two types – articulated friendships and communication interactions. This paper provides empirical evidence for the differences between articulated friendships and communication interactions and the corresponding articulated and communication networks. In order to compare the impacts of the social influences based on these two networks, we utilize support vector machines to build a classifier to predict virtual community membership and we further estimate the marginal effects of these social influences using a two-stage probit least squares method. We find significant explanatory power of social influences in predicting virtual community membership. Although the communication network is much sparser than the articulated network, social influences based on the communication network achieve similar performance as the articulated network. These findings provide important implications for social media marketing as well as the management of virtual communities.
|Andrei Neboian and Stefan Spinler||
Fleet Replacement, Technology Choice and the Option to Breach a Leasing Contract
Abstract:We analyze the option to breach a leasing contract when replacing a fleet of ICVs (internal combustion engine vehicles) and EVs (electric vehicles) subject to cost uncertainty. We derive the optimal policy for technology choice and breaching ICV contracts. The decision to breach is shown to offer both cost savings resulting from reduced ICV operating costs and preemptive acquisition, but incurs additional costs arising from the need to compensate for breached vehicles and in the form of opportunity costs. We also demonstrate that the effects of breaching a leasing contract have a ripple effect across the decision horizon, thus amplifying the impact of a single breach. A numerical study based on data from La Poste, the French postal service, shows that breaching a leasing contract in this context offers measurable cost benefits.
|Sriram Narayanan, and Ram Narasimhan||
Governance choice, sourcing relationship characteristics and relationship performance
Abstract:Past work on exchange relationships has debated the efficacy of partnership versus arm’s-length governance on performance of a buyer-supplier relationship. However, how these governance approaches leverage key supplier specific relationship characteristics has not been examined. In this study, we examine the moderating role of governance choice (arm’s-length versus partnership governance) in leveraging key supplier specific characteristics to achieve superior performance for the buyer in a relationship. Specifically, drawing from residual rights theory, we argue that the governance choice buyers make moderates the impact of supplier flexibility, supplier human capital and relationship dependency on performance. Our findings suggest that, for a buyer, the benefits of supplier flexibility and relationship dependency are better realized in partnership governance as opposed to arm’s-length governance. Further, our findings suggest that while buyers choose a specific governance approach consistent with their outsourcing motivation, the choice of governance is critical to leveraging the impact of supplier characteristics due to the moderation effects studied. We elaborate on these effects and discuss the implications of our findings.
|Howard Hao-Chun Chuang, Guanyi Lu, David Xiaosong Peng, Gregory R. Heim||
Impact of Value-Added Service Features in e-Retailing Processes: An Econometric Analysis of Website Functions
Abstract:We examine the impact of three classes of website functions (foundational, customer-centered, and value-added) upon e-retailer performance. Using secondary panel data for 2007-2009 on operating characteristics of over 600 e-retailers, our econometric analysis finds that only the value-added service functions are positively associated with changes in e-retail sales revenues across time. We also observe a decreasing marginal impact of deploying additional value-added service features. To account for possible alternate explanations, we control for firm- and time-specific fixed effects, merchant types, merchandise categories, and order fulfillment strategies. By further decomposing e-retail sales revenues into website traffic, conversion rate, and average order value, we find that website functions affect e-retail sales revenues mainly through their impact on website traffic. Our investigation demonstrates the empirical research usefulness of the Voss (2003) conceptual e-service sand cone model. Our results identify for managers where to focus ongoing e-retailing system development efforts, yet suggest that focusing too many retailing capabilities on exploratory and experimental value-added service features may backfire, potentially leading to worsening e-retailer performance.
|Anne Touboulic, Daniel Chicksand, and Helen Walker||
Managing Imbalanced Supply Chain Relationships for Sustainability: A Power Perspective
Abstract:This study adopts a power perspective to investigate sustainable supply chain relationships and specifically uses resource dependence theory (RDT) to critically analyze buyer–supplier–supplier relationships. Empirical evidence is provided, extending the RDT model in this context. The concept of power relationships is explored through a qualitative study of a multinational company and agricultural growers in the UK food industry that work together to implement sustainable practices. We look at multiple triadic relationships involving a large buyer and its small suppliers to investigate how relative power affects the implementation of sustainable supply-management practices. The study highlights that power as dependence is relevant to understanding compliance in sustainable supply chains and to identifying appropriate relationship-management strategies to build more sustainable supply chains. We show the influences of power on how players manage their relationships and how it affects organizational responses to the implementation of sustainability initiatives. Power notably influences the sharing of sustainability-related risks and value between supply chain partners. From a managerial perspective, the study contributes to developing a better understanding of how power can become an effective way to achieve sustainability goals. This paper offers insights into the way in which a large organization works with small and medium size enterprises (SMEs) to implement sustainable practices and shows how power management—that is, the way in which power is used—can support or hinder effective cooperation around sustainability in the supply chain.
|Kevin Linderman, and Aravind Chandrasekaran||
Managing Knowledge Creation in High-Tech R&D Projects: A Multi-method Study
Abstract:R&D projects in high-tech organizations bring together diverse knowledge domains to quickly develop new products and processes. The fast paced context of high-tech organizations makes it challenging to create new knowledge and solve complex problems. Managing these R&D projects requires understanding both the mechanisms and the type of knowledge created to achieve project objectives. This research conducts a two phased multi-method study to understand knowledge creation in high-tech R&D projects. The first phase uses qualitative data to develop a theory on knowledge creation in R&D projects. The second phase involves a survey that collects data from R&D projects to test the theory. Results from the case study find that R&D projects benefit from two types of knowledge - objective and intuitive. The case analyses shows that intuitive and objective knowledge creation in high-tech organizations occurs by creating not only diverse but also psychological safe project teams. The large scale survey finds that team diversity positively influences objective knowledge creation while psychological safety affects intuitive knowledge creation. Surprisingly, the results show that team diversity negatively affects intuitive knowledge creation. A post-hoc analysis takes a more granular look at diversity and shows that different kinds of diversity have different effects on knowledge creation. This helps to better explain how to manage innovation across boundaries. Finally, the analysis shows that both objective and intuitive knowledge influence R&D project performance. Taken together these results help explain how to manage innovation across functional boundaries to create knowledge and enhance R&D project performance.
|Zafer Ozdemir, Tolga Akcura, and Mohammad Rahman||
Online Intermediary as a Channel for Selling Quality Differentiated Services
Abstract:When deciding whether to utilize an online intermediary in addition to their own distribution channels, quality differentiated service providers face the trade-off between the benefit of extended reach and the threat of increased competition. Using an analytical framework, we analyze when and how service providers may utilize an online intermediary to their advantage in the presence of advance selling (i.e., selling a service at an early date for future consumption). In general, when an online intermediary is used, the competition effect dominates the reach effect and leads to a falling price trend. Interestingly, we find that the negative effect of increased competition on profits, due to intermediary usage, can be reversed by committing to self-imposed participation limits (i.e., selling only a predetermined amount of services through the online intermediary). This ensures that the service provider is better off selling through both its own site and the online intermediary, rather than selling exclusively using either channel.
|Jing Shao, Harish Krishnan, and S. Thomas McCormick||
Price Incentives and Coordination in a Two-product Decentralized Supply Chain
Abstract:We investigate pricing incentives for competing retailers who distribute two variants of a manufacturer's product in a decentralized supply chain. Under a two-dimensional Hotelling model, we derive decentralized retailers' prices for the products, and distortions in pricing when compared to centrally optimal prices. We show that price distortions decrease as consumers' travel cost between retailers increases, due to less intense competition. However, price distortions do not change monotonically in consumers' switching cost between products within stores. To fix decentralized retailers' price distortions, we construct a two-part pricing contract that coordinates the supply chain. We show that the coordinating contract is Pareto-improving and analyze the increase in the supply chain profit under coordination.
|Landon Kleis, Barrie Nault, and Albert Dexter||
Producing Synergy: Innovation, IT and Productivity
Abstract:Bringing innovations to market is critical to industrial progress and economic growth. We explore the potential for IT to enable innovations, and thus improve productivity. We hypothesize that a knowledge stock of process-oriented R&D increases total factor productivity growth by leveraging traditional forms of capital and labor, and further enhances the ability of IT capital to increase productivity. We estimate these relationships using two broad panels of US industries covering the periods 1987–1998 and 1998–2005. The results indicate qualified support for a synergistic effect of R&D and IT investment in both periods.
|Thomas Kull, Adegoke Oke, and Kevin Dooley||
Supplier Selection Behavior under Uncertainty: Contextual and Cognitive Effects on Risk Perception and Choice
Abstract:Buyers often make supplier selection decisions under conditions of uncertainty. While the analytical aspects of supplier selection are well developed, the psychological aspects are less so. This paper uses supply chain management and behavioral decision theories to propose that attributes of the purchasing situation (category difficulty, category importance, and contingent pay) affect cognition that, in turn, affects a supply manager’s choice. We conducted a supplier selection behavioral experiment with practicing managers to test the model’s hypotheses. When the context involves an important or difficult sourcing category, higher risk perceptions exist that increase preference for a supplier with more certain outcomes, even when that choice has a lower expected payoff. However, the presence of contingent pay decreases risk perceptions through higher perceived supplier control. We also find that a manager’s risk propensity increases preferences for a supplier with less certain outcomes regardless of perceived risk. Our model and results provide a theoretical framework for further study into the cognitive aspects of supplier selection behavior and provide insight into biases that influence practicing supply chain managers.
|Xiaohang Yue, Layth Alwan, Minghui Xu, and Dongqing Yao||
The Dynamic Newsvendor Model with Correlated Demand
Abstract:The classic newsvendor model was developed under the assumption that period-to-period demand is independent over time. In real-life applications, the notion of independent demand is often challenged. In this paper, we examine the newsvendor model in the presence of correlated demands. Specifically under a stationary AR(1) demand, we study the performance of the traditional newsvendor implementation versus a dynamic forecast-based implementation. We demonstrate theoretically that implementing a minimum mean square error (MSE) forecast model will always have improved performance relative to the traditional implementation in terms of cost savings. In light of the widespread usage of all-purpose models like the moving-average method and exponential smoothing method, we compare the performance of these popular alternative forecasting methods against both the MSE-optimal implementation and the traditional newsvendor implementation. If only alternative forecasting methods are being considered, we find that under certain conditions it is best to ignore the correlation and opt out of forecasting and to simply implement the traditional newsvendor model.
Theory development in Operations Management: Extending the Frontiers of a Mature Discipline via Qualitative Research
Abstract:This invited paper discusses theory development in operations management. Many stellar researchers have made excellent contributions to theory development in our field. Operations management is a maturing discipline. Recently, “theory driven” empirical research has become common in top-tier journals in our field. Impelled by this trend and due to the path dependency of research, in general, researchers have examined operations phenomena using theories from management and organizational science. How do we extend the frontiers of knowledge in our maturing discipline? How do we develop theories within the field of operations management? In examining some of the seminal ideas that have shaped our field, a common characteristic is that they relied on observational studies and conceptual reasoning. Is it time for us to stress the usefulness of qualitative research methods in our field? Could this lead to an intellectual renewal in our field and extend the frontier of a maturing discipline? This paper explores these questions and advances the notion that qualitative analysis needs to be emphasized more than it has been in recent past. This paper is meant to provoke discussion among empirical researchers in operations management.
|Yung-Ming Li and Jhih-Hua Jhang-Li||
Analyzing the Integration of WiMAX and Wi-Fi Services: Bandwidth Sharing and Channel Collaboration
Abstract:Several emerging studies have focused on the pricing issue of bandwidth sharing between Wi-Fi and WiMAX networks; however, most either concentrate on the design of collaborated protocols or figure out the issue without the overall consideration of consumer preferences and contract design. In this study, we explore a wireless service market in which there are two wireless service providers operating Wi-Fi and WiMAX. One of the research dimensions given in this study is whether wireless service providers implement bandwidth sharing, while the other is whether they make decisions individually or jointly. By involving consumer preferences and a wholesale price contract in the present model, we find that bandwidth sharing would benefit a WiMAX service provider, yet a Wi-Fi service provider would make no significant savings under a wholesale price contract. In addition, the profit of a WiMAX service provider may increase with Wi-Fi coverage when bandwidth sharing has been implemented but decrease with Wi-Fi coverage when both wireless services operate without bandwidth sharing. Furthermore, the WiMAX service provider allocates more capacity when the average usage rate increases, but lowers the expenditure of capacity when the average usage rate is too high.
|W.C. Benton Jr.||
A Profitability Evaluation of America’s Best Hospitals, 2000–2008
Abstract:Each year U.S. News and World Report evaluates more than 5,000 U.S. hospitals, of which approximately 3% are considered the best hospitals in America, and hospital profitability has emerged as a business objective for these hospitals. This study investigates the profitability performance of the best (highest quality) hospitals in the U.S. A nine-year longitudinal investigation of profitability for the best hospitals in the U.S. is conducted. The results offer evidence that the primary drivers of hospital profitability are the case mix index and daily bed capacity. In terms of hospital profitability, there appears to be a tradeoff between these two factors. Finally, there is an increasing demand for bed units, and yet no financial incentive to add more bed units is shown in the study.
|Ruchita Gupta and Karuna Jain||
Adoption of Mobile Telephony in Rural India: An Empirical Study
Abstract:Mobile telephony has become one of the major factors driving the social and economic development of a country. The objective of this paper is to identify factors affecting the adoption of mobile telephony in rural India and examine their impact on its adoption. An explanatory empirical methodology with sequential design was used for this purpose, and new factors that affect users’ decisions to adopt mobile telephony in rural India were identified. We extended the technology acceptance model by integrating new factors for a developing nation. This study found that ensuring service transparency and identifying opinion leaders in the local community are key requirements for increasing the speed of adoption in the rural India. The findings of this study will provide insights for service providers and policy makers to develop strategies and policies that will enhance mobile telephony adoption in rural India.
|Öznur Özdemir-Akyıldırım, Meltem Denizel, and Mark Ferguson||
Allocation of Returned Products among Different Recovery Options through an Opportunity Cost based Dynamic Approach
Abstract:In a make-to-order product recovery environment, we consider the disposition decision under stochastic demand of a firm with three options: refurbishing to resell, parts harvesting, and recycling. We formulate the problem as a multi-period Markov Decision Process (MDP) and present a Linear Programming approximation which provides an upper bound on the optimal objective function value of the MDP model. We then present two solution approaches to the MDP using the LP solution: a static approach which uses the LP solution directly and, a dynamic approach which adopts a revenue management perspective and employs bid-price controls technique where the LP is resolved after each demand arrival. We calculate the bid prices based on the shadow price interpretation of the dual variables for the inventory constraints and accept a demand if the marginal value is higher than the bid price. Since the need for solving the LP at each demand arrival requires a very efficient solution procedure, we present a transportation problem formulation of the LP via variable redefinitions and develop a one-pass optimal solution procedure for it. We carry out an extensive numerical analysis to compare the two approaches and find that the dynamic approach provides better performance in all of the tested scenarios. Furthermore the solutions obtained are within 2% of the upper bound on the optimal objective function value of the MDP model.
|Stanley E. Griffis, Chad W. Autry, LaDonna M. Thornton, and Anis ben Brik||
Assessing Antecedents of Socially Responsible Supplier Selection in Three Global Supply Chain Contexts
Abstract:A number of highly publicized, controversial lapses in social responsibility (SR) within global supply chains have forced managers and scholars to reexamine long-held perspectives on supplier selection. Extending Carter and Jennings’ (2004) department-level study of purchasing social responsibility, our research assesses the role of supply managers’ ethical intentions and three key antecedents that drive socially responsible supplier selection. Comparing evidence from firms operating in China, the U.S., and the U.A.E., we identify three key drivers of supply managers’ ethical intentions and examine both their direct and indirect impacts on socially responsible supplier selection. We find differential support for the predictor relationships on supply manager ethical intentions across national contexts and mediated versus non-mediated models. These observations bear important implications for firms conducting global supply management.
|Hong-Bin Yan, Tieju Ma, and Van-Nam Huynh||
Coping with Group Behaviors in Uncertain Quality Function Deployment
Abstract:Quality function deployment (QFD) is a planning and problem-solving tool gaining wide acceptance for translating customer needs (CNs) into technical attributes (TAs) of a product. It is a crucial step to derive the prioritization of TAs from CNs in QFD. However, it is not so straightforward to prioritize TAs due to two types of uncertainties: human subjective perception and user variability. The main focus of this paper is to propose a group decision-making approach to uncertain QFD with an application to a flexible manufacturing system design. The proposed approach performs computations solely based on the order-based semantics of linguistic labels to eliminate the burden of quantifying qualitative concepts in QFD. Moreover, it incorporates the importance weights of users and the concept of fuzzy majority into aggregations of individual fuzzy preference relations of different TAs in order to model the group behaviors in QFD. Finally, based on a quantifier-guided net flow score procedure, the proposed approach derives a priority ranking with a classification of TAs into important and unimportant ones so as to provide a better decision-support to the decision-maker. Due to the easiness in articulating preferential information, our approach can reduce the cognitive burden of QFD planning team and give a practical convenience in the process of QFD planning.
|Gregory R. Heim, Xiaosong (David) Peng, and Shekhar Jayanthi||
Longitudinal Analysis of Inhibitors of Manufacturer Delivery Performance
Abstract:This paper examines demand, manufacturing, and supply factors proposed to inhibit manufacturer delivery execution. Extant research proposes many factors expected to harm delivery performance. Prior cross-sectional empirical research examines such factors at the plant-level, generally finding factors arising from dynamic complexity to be significant, but factors arising from detail complexity to be insignificant. Little empirical research examines the factors using product-level operating data, which arguably makes more sense for analyzing how supply chain complexity factors inhibit delivery. For purposes of research triangulation, we use longitudinal product-level data from MRP systems to examine whether the factors inhibit internal manufacturing on-time job rates and three customer-oriented measures of delivery performance: product line item fill rates, average delivery lead times, and average tardiness. Our econometric models pool product line item data across division plants and within distinct product families, using a proprietary monthly dataset on over 100 product line items from the environmental controls manufacturing division of a Fortune 100 conglomerate. The data summarize customer ordering events of over 900 customers and supply chain activities of over 80 suppliers. The study contributes academically by finding significant detail complexity inhibitors of delivery that prior studies found insignificant. The findings demonstrate the need for empirical research using data disaggregated below the plant-level unit of analysis, as they illustrate how some factors previously found insignificant indeed are significant when considered at the product-level unit of analysis. Managers can use the findings to understand better which drivers and inhibitors of delivery performance are important.
|Rui Yin and Christopher S. Tang||
Optimal Temporal Customer Purchasing Decisions Under Trade-in Programs with Upfront Fees
Abstract:To entice customers to purchase both current and new generation products over time, many firms offer different trade-in programs including programs that require customers to pay an upfront fee. To examine the effectiveness of the trade-in programs, we develop a 2-period model in which a firm sells the first generation product in the first period and the second generation product in the second period; however, the firm offers a trade-in program that customers can participate when purchasing the first generation product in the first period. To participate, each customer has to pay a non-refundable fee in the first period so that she has the option to trade-in her first generation product and receive a pre-specified trade-in value to be used for the purchase of the second generation product in the second period. To capture market heterogeneity and market uncertainty, we examine the case when the valuation of the first generation product varies among customers and the valuation of the second generation product is uncertain a priori. By analyzing a 2-period game, we determine the optimal purchasing behavior of each rational customer, and we show that the firm is always better off by offering its own trade-in programs. Also, our numerical analysis reveals that trade-in programs can benefit the firm significantly especially when: (a) the residual value of the first generation product is high; (b) the expected incremental value of the second generation product is high; or (c) the valuation of the second generation product is highly uncertain.
|Christopher W. Zobel||
Quantitatively Representing Nonlinear Disaster Recovery
Abstract:This paper provides a new technique for quantitatively characterizing the progress of recovery operations in the aftermath of a disaster event. The approach extends previous research on measuring dynamic or adaptive disaster resilience by developing a robust approach for characterizing nonlinear disaster recovery. In doing so, it enables a more accurate mathematical representation of different categories of recovery behavior and provides support for a much broader application of existing theory. Because the new approach inherits the ability to compare the relative behavior of multiple scenarios simultaneously, it also can serve as the basis for analytically comparing the expected performance of different plans for recovery operations. Practical application of the technique is demonstrated and discussed in the context of recovering electrical power after Hurricane Sandy struck the New York metropolitan area.
|Fei Qin, Uday S. Rao, Haresh Gurnani, and Ramesh Bollapragada||
Role of Random Capacity Risk and the Retailer in Decentralized Supply Chains with Competing Suppliers
Abstract:The current research considers a supply chain under the following conditions (1) Two heterogeneous suppliers are in competition, (2) Supply capacity is random and pricing is endogenous, (3) Consumer demand, with and without an intermediate retailer, is price dependent. Specifically, we examine how uncertainty in supply capacity affects optimal ordering and pricing decisions, supplier and retailer profits, and the incentives to reduce such uncertainty. When two suppliers sell through a monopolistic retailer, supply uncertainty not only affects the retailer’s diversification strategy for replenishment, but also changes the suppliers’ wholesale price competition and the incentive for reducing capacity uncertainty. In this dual-sourcing model, we show that the benefit of reducing capacity uncertainty depends on the cost heterogeneity between the suppliers. In addition, we show that a supplier does not necessarily benefit from capacity variability reduction. We contrast this incentive misalignment with findings from the single-supplier case and a supplier-duopoly case where both suppliers sell directly to market without the monopolistic retailer. In the latter single-supplier and duopoly cases, we prove that the unreliable supplier always benefits from reducing capacity variability. These results highlight the role of the retailer's diversification strategy in distorting a supplier’s incentive for reducing capacity uncertainty under supplier price competition.
|Kenneth J. Klassen and Reena Yoogalingam||
Strategies for Appointment Policy Design with Patient Unpunctuality
Abstract:Appointment policy design is complicated by patients who arrive earlier or later than their scheduled appointment time. This paper considers the design of scheduling rules in the presence of patient unpunctuality and how they are impacted by various environmental factors. A simulation optimization framework is used to determine how to improve performance by adjusting the schedule of appointments. Prior studies (that did not include patient unpunctuality) have found that a scheduling policy with relatively consistent appointment interval lengths in the form of a dome or plateau dome rule to perform well in a variety of clinic environments. These rules still perform reasonably well here, but it is shown that a combination of variable-length intervals and block scheduling are better at mitigating the effects of patient unpunctuality. In addition, performance improves if the use of this policy increases towards the end of the scheduling session. Survey and observational data collected at multiple outpatient clinics are used to add realism to the input parameters and develop practical guidelines for appointment policy decision making.
|Qing Hu and Ali Yayla||
The Effect of Board of Directors' IT Awareness on CIO Compensation and Firm Performance
Abstract:Chief information officers (CIOs) play increasingly strategic roles in firms in this competitive global economy, which is now largely powered by information technology (IT). However, research has shown a lack of board of directors' oversight on CIO- and IT-related issues. Drawing on agency, resource dependence, and alignment theories, we investigate the effect of board of directors' IT awareness on CIO compensation structure and firm performance. We conduct cross-sectional time series analyses of data collected from various sources. Our study underlines three important findings. First, we show that some commonly known executive compensation determinants, such as individual characteristics and governance structure, do not have significant effects on CIO compensation structure. Second, with regard to CIO compensation structure, firms respond to increasing information asymmetry differently according to the level of IT awareness of their boards. Finally, firms perform better when their boards have higher levels of IT awareness, and this positive effect of IT awareness is considerably larger in IT intensive industries. Overall, our study provides empirical support for the important role of boards' IT awareness in shaping CIO compensation and improving firm performance. Our results suggest that boards with functional area knowledge—or higher IT awareness in this case—can more effectively monitor and better incentivize executives, and consequently lead to better firm performance.
|Ranjani Krishnan, Ge Bai, and Sylvia Hsu||
Accounting Performance and Capacity Investment Decisions: Evidence from California Hospitals
Abstract:Capacity decisions involve tradeoffs between the cost of capacity and the opportunity costs of lost sales. Accounting researchers posit that accounting performance provides sufficient information about these tradeoffs and thus can be used to formulate simple rules to assist capacity decisions. Empirical research has not examined the role of accounting information in capacity investment decisions at the department level in a multi-product firm in the presence of social costs. Empirical analyses using department-level data from California hospitals for the period 1998–2005 show that hospitals are more likely to make capacity investments in departments with high accounting performance. However, in the presence of demand variability, the association between accounting performance and capacity investment is attenuated because of the resulting increase in noise in accounting performance measures. Thus the weight on accounting performance as a decision tool for capital investments reduces when there is demand variability. Another factor that reduces the weight on accounting performance is capacity utilization. Higher capacity utilization can lead to turning away or rerouting of patients to other hospitals and negatively impacts reputation and quality of care, which increases the hospital’s social costs. Hence, hospitals do not require high accounting performance before investing in a department with high capacity utilization. This empirical evidence of the role of accounting performance in capacity investment decisions fills a gap in the capacity investment literature and furthers our understanding of the interactions between accounting performance and the operational determinants of firms’ capacity investment behavior.
|Yen-Liang Chen, Li-Chen Cheng, and Weu-Yu Hsu||
A New Approach to the Group Ranking Problem: Finding Consensus Ordered Segments from Users' Preference Data
Abstract:The group ranking problem involves constructing coherent aggregated results from users' preference data. The goal of most group ranking problems is to generate an ordering list of all items that represents the user consensus. There are, however, two weaknesses to this approach. First, a complete list of ranked items is always output even when there is no consensus or only a slight consensus. Second, due to similarity of performance, in many practical situations it is very difficult to differentiate whether one item is really better than another within a set. These weaknesses have motivated us to apply the clustering concept to the group ranking problem, to output an ordered list of segments containing a set of similarly preferred items, called consensus ordered segments. The advantages of our approach are that (1) the list of segments is based on the users' consensuses, (2) the items with similar preferences are grouped together in the same segment, and (3) the relationships between items can be easily seen. An algorithm is developed to construct the consensus of the ordered segments from the users' total ranking data. Finally, the experimental results indicate that the proposed method is computationally efficient, and can effectively identify consensus ordered segments.
|Xenophon Koufteros, Cornelia Droge, Gregory Heim, Nelson Massad, and Shawnee Vickery||
Encounter Satisfaction in E-tailing: Are the Relationships with its Order Fulfillment SQ Antecedents and its Consequences Moderated by Historical Satisfaction?
Abstract:This study focuses on whether historical satisfaction with an e-tailer (HSat) moderates baseline relationships in order fulfillment service quality models. HSat is defined as satisfaction with the etailer spanning all transactions except the current encounter. Encounter satisfaction (ESat) is defined as the consumer’s satisfaction with the current transaction. In the baseline model, four order fulfillment service quality (OFSQ) dimensions managerially relevant to consumer e-tailing are examined: timeliness, availability, condition, and billing accuracy. The baseline structural model results support that OFSQ dimensions impact ESat, which in turn predicts two key consequences – repurchase intention and word-of-mouth. Adaptation Theory is used to model the role of HSat, while controlling for transaction recency, vendor familiarity, and competitive pricing. HSat is shown to have pervasive main and interaction effects upon all baseline model relationships. These moderation effects have great managerial relevance. For example, the results illustrate a phenomenon similar to the service recovery paradox, wherein when a negative service encounter is followed by a highly positive service recovery event, previously dissatisfied consumers, as compared to previously satisfied consumers, respond with higher levels of current satisfaction. For managers, this finding is encouraging because policies that create highly positive events for consumers can thus supersede past negative experiences. Our results show however that HSat cannot be completely superseded by current OFSQ or current ESat.
|Srinivas Talluri, Wenming Chung, and Ram Narasimhan||
Quantity Flexibility Contract in the Presence of Discount Incentive
Abstract:We design a new contract that combines the quantity flexibility (QF) mechanism and the price-only discount incentive, which we refer to as the QFi contract. Under the QF contract, the buyer does not assume full responsibility for the forecast, yet the supplier guarantees the availability of the forecasted quantity and extra buffer inventory. In contrast, the price-only discount contract places full inventory burden on the buyer. We show that the proposed QFi contract effectively balances the inventory risk for both the buyer and the supplier considering both the QF and discount mechanisms. We also show that the QFi contract is able to achieve supply chain coordination. More importantly, the QFi contract’s coordinating price scheme does not require knowledge of demand distribution. We identify areas where the buyer and the supplier may both benefit from implementing the QFi contract as opposed to the extant QF or price-only (wholesale) discount contractual decisions in a decentralized supply chain. We also specify the conditions under which supply chain coordination can be achieved in a win-win manner. We conclude with managerial implications and provide directions for future research.
|Yue Jin, Jennifer Ryan, and Walter Yund||
Sourcing Decisions with Competitive Suppliers and Imperfect Information
Abstract:Manufacturers often must choose between outsourcing and producing internally. This choice is complex and influenced by a variety of factors, including the costs and capabilities of the potential suppliers. In addition, if the manufacturer outsources, he must design the sourcing process. We study the manufacturer's outsourcing decision, with a focus on the impact of the sourcing process on that decision. We consider a setting in which the manufacturer has imperfect information regarding the suppliers' costs and capabilities, and we assume the manufacturer uses a two-stage sourcing process. The first stage is the qualification stage, in which the manufacturer seeks to reduce the uncertainty regarding the suppliers' capabilities. The second stage is the supplier selection stage, in which the manufacturer selects among the qualified suppliers on the basis of price. We first characterize the optimal design of the two-stage process, and then consider the outsourcing decision. We demonstrate several tradeoffs. Vertical integration enables the manufacturer to reduce uncertainty and extract all of the profits of production. However, outsourcing enables the manufacturer to take advantage of the (potentially) lower costs and higher capabilities of the suppliers, particularly if competition between suppliers can be encouraged. We find that the manufacturer is more likely to vertically integrate when the warranty cost and the cost of exerting effort during qualification are large, and when there is significant uncertainty regarding the suppliers' capabilities. The manufacturer is more likely to outsource when the suppliers' costs (capabilities) are low (high), and when the number of suppliers is large.
|Gang Peng, Jifeng Mu, and C. Anthony Di Benedetto (contact)||
Learning and Open Source Software License Choice
Abstract:Licensing is the defining characteristic of open source software (OSS) and often has tremendous impact on the success of OSS projects. However, OSS licenses are very different from those for proprietary software, and our understanding of the choice of OSS licenses is very limited. In this study, we explore this important decision from a learning perspective. We build collaboration networks and trace paths through which potential learning and knowledge flow across projects occur using a dataset derived from SourceForge. We identify that both experiential learning and vicarious learning have significant influence on OSS license choice. We provide reasons why experiential learning and vicarious learning affect decision-making regarding OSS license choice, and explore important contingencies under which the two modes of learning are more effective. We find that leadership roles on prior projects and similarities between projects significantly moderate these two modes of learning respectively. More importantly, we argue and empirically illustrate that experiential learning is more powerful than vicarious learning in influencing OSS license choice. Our research sheds new light on our understanding of license choice for OSS projects and provides practical guidelines for future OSS development.
Asymmetric Forecast Information and the Value of Demand Observation in Repeated Procurement
Abstract:In many supply chain relationships that continue over multiple periods, information about the hidden properties of the supply chain partners can be revealed throughout the course of the relationship. This paper examines how the availability of such information affects the contracting scheme between a supplier and his manufacturer in a relationship that persists over several selling seasons. At the beginning of the first selling season, the manufacturer observes private information about the demand distribution, whereas the supplier who is less familiar with the market is endowed only with a prior belief about the market condition. When the supplier cannot observe the demand realization during the first selling period, she offers a contract that induces the manufacturer to reveal the market condition in the first selling season. However, the opportunity for the supplier to observe demand realization can result in the supplier offering the manufacturer a simple contract that does not induce the manufacturer to reveal his private information during the first selling season. In the latter case, the supplier observes the demand realization and designs the second period contract based on this information. We show that when the supplier chooses to offer such a contract, the manufacturer becomes worse-off, and it has an ambiguous effect on the performance of the supply chain.
|Toyin Clottey and W.C. Benton||
Guidelines for Improving the Power Values of Statistical Tests for Non-Response Bias Assessment in OM Research
Abstract:The assessment of non-response bias in survey based empirical studies plays an important role in establishing the credibility of research results. Statistical methods which involve the comparison of responses from two groups (e.g., early vs. late respondents) on multiple characteristics, which are relevant to the study, are frequently utilized in the assessment of non-response bias. We consider the concepts of individual and complete statistical power used for multiple testing and show their relevance for determining the number of statistical tests to perform when assessing non-response bias. Our analysis of factors that influence both individual and complete power levels, yielded recommendations that can be used by OM empirical researchers to improve their assessment of non-response bias. A power analysis of 61 survey-based research papers published in three prestigious academic OM journals, over the last decade, showed the occurrence of very low (<0.4) power levels in some of the statistical tests used for assessing non-response bias. Such low power levels can lead to erroneous conclusions about non-response bias, and are indicators of the need for more rigor in the assessment of non-response bias in OM research.
Channel Structure Design for Complementary Products under a Co-opetitive Environment
Abstract:In the high-tech industry, firms can be partners in one respect (e.g., resellers) and competitors in another. In this paper, we investigate the channel structure problem for two firms – each selling competing products in two complementary markets – who are deciding whether to sell their products to customers directly or distribute one of them through a competitor. The customers are heterogeneous and both firms have products that are horizontally differentiated. When selling products directly, the firm can co-ordinate the prices of the two complementary products and avoid the inefficiency of double marginalization. However, selling (indirectly) through the competing manufacturer can mitigate competition because the competitor shares the profit of both competing products and therefore does not price its own products aggressively. One might expect that when the externality across the markets is strong, firms would prefer to sell both products directly (rather than through the competitor) in order to take advantage of the complementarity between markets and eliminate the inefficiency of double marginalization. Interestingly, we find that even though the first mover chooses to sell both products directly, the second mover forsakes the opportunity to co-ordinate the prices of its products and instead opts to distribute one of the products through the first mover.
Capacity Investment and Product Line Decisions of a Multiproduct Leader and a Focus Strategy Entrant
Abstract:In this paper, I investigate the capacity investment cost conditions where a multiproduct market leader may respond to a focus strategy entrant by using different strategies such as changing the product mix, production volumes, quality levels, and by investing in more capacity. The products offered in the market are quality differentiated and the customer base is heterogeneous in their willingness to pay for quality. The capacity investment costs of the two firms (i.e., the leader and the entrant) may also be different. Classical Stackelberg model predicts that an incumbent does not change its position in response to entry. However, when heterogeneous customer base, product differentiation, and capacity costs are taken into consideration, I find that the leader with a low capacity cost may choose to expand its product line and increase its production. The leader with low capacity cost may introduce a product that it was holding back when the entrant has to bear the high capacity cost and cannibalization threat is relatively small. The extent of production volume strategies reduces as the capacity cost increases for the leader. I also find that when the leader has the power to set the industry standards by deciding the quality levels, as a response to a high quality focused entrant, the leader increases both levels of quality and production of the low quality product. Moreover, when the capacity investment cost is high for both the entrant and the leader, I find that market prices may increase with entry.
|B. Elango, Srinivas (Sri) Talluri, and G. Tomas M. Hult||
Understanding Drivers of Risk-Adjusted Performance for Service Firms with International Operations
Abstract:This paper investigates whether international operations of service firms increase performance while reducing risk. The paper draws on a longitudinal dataset of 584 internationally operating service firms from the United States. Analysis indicates that international diversification is negatively related to risk-adjusted performance. However, it is established that international diversification interacts with internationalization and positively influences risk-adjusted performance. This finding offers significant promise for firms, as it indicates that international operations (if managed well), through exposure to varied foreign markets coupled with adequate global scope, can lead to firms’ increased risk-adjusted performance. The results provide a mechanism for decision-makers to better understand international operations of service firms and present a strategy for achieving success in international markets by effectively managing two important levers, i.e., internationalization and international market diversification.
|Pankaj C. Patel, Arash Azadegan, and Lisa M. Ellram||
The Effects of Strategic and Structural Supply Chain Orientation on Operational and Customer-Focused Performance
Abstract:Supply chain orientation (SCO), or the implementation of a supply chain management philosophy, consists of two distinct, yet interdependent elements, namely strategic SCO and structural SCO. Strategic SCO involves integrating a SCM philosophy into the firm’s strategy development, while structural SCO encompasses operational-level behaviors and actions that reflect such a philosophy. This study extends the research on SCO by developing hypotheses on the contingent effects of strategic SCO and structural SCO on a firm’s operational and customer-focused performance. Drawing on the Strategy-Structure-Performance framework, the study proposes that strategic SCO and structural SCO positively affect different dimensions of performance and that structural SCO plays a mediating role in the relationship between strategic SCO and performance. These relationships are tested using primary survey data and archival data from 183 manufacturers in the Midwestern US. Results confirm that strategic SCO is associated with both operational performance and customer-focused performance, but structural SCO is only related to operational performance. Structural SCO acts as a mediator in linking strategic SCO with operational performance and customer-focused performance and mediation effects are strengthened at higher levels of environmental dynamism.
|Gilvan C. Souza||
Closed-Loop Supply Chains: A Critical Review, and Future Research
Abstract:In this paper I present a review and tutorial of the literature on closed-loop supply chains, which are supply chains where, in addition to typical forward flows, there are reverse flows of used products (post consumer use) back to manufacturers. Examples include supply chains with consumer returns, leasing options, and end-of-use returns with remanufacturing. I classify the literature in terms of strategic, tactical, and operational issues, but I focus on strategic issues (such as when should an OEM remanufacture, response to take-back legislation, and network design, among others) and tactical issues (used product acquisition and disposition decisions). The paper is written in the form of a tutorial, where for each topic, I present a base model, with underlying assumptions, results, comment on extensions, and conclude with my view on needed research areas.
|Fujun Lai, Xiaolin Li, and Vincent Lai||
Transaction-Specific Investments, Relational Norms and ERP Customer Satisfaction: A Mediation Analysis
Abstract:Integrating the perspectives of transaction cost economics (TCE), the resource-based view (RBV), and resource dependency theory (RDT), this study analyzes the institutional settings of enterprise resource planning (ERP) implementations in China. Specifically, it examines how bilateral transaction specific investments (TSIs) and relational governance mechanisms influence customer satisfaction with ERP implementations. The model is empirically tested using data from on-site interviews with 208 ERP customers in China. The results demonstrate that the effects of vendors’ and customers’ TSIs on customer satisfaction are facilitated by multiple-stage micromediational chains. The influence of TSIs on customer satisfaction is mediated by relational norms, and the impact of relational norms on customer satisfaction is bridged by perceived service quality and customer trust. Furthermore, the influence of vendors’ TSIs is stronger than the influence of customers’ TSIs. The findings contribute to business research and practice by providing valuable insights into how ERP vendors and customers should strategize transaction-specific investments to enhance relationship performance.
|Lingfang Li and Anna Bargagliotti||
Decision Making Using Rating Systems: When Scale Meets Binary
Abstract:This paper investigates how different decisions can be reached when decision makers consult a binary rating system and a scale rating system. Since typically decision makers use rating information to make binary decisions, it is particularly important to compare the scale system to the binary system. We show that the only N-point scale system that reports a rater's opinion consistently with the binary system is one where N is odd and N - 1 is not divisible by 4. At the aggregate level, however, we illustrate that inconsistencies persist regardless of the choice of N. In addition, we provide simple tools that can determine whether the systems lead decision makers to the same decision outcomes.
|Tracy Jenkin, Yolande Chan, David Skillicorn, and Keith Rogers||
Individual Exploration, Sensemaking and Innovation: A Design for the Discovery of Novel Information
Abstract:Discovering novel information can result in the generation of potentially valuable new ideas and therefore be beneficial to organizations interested in innovation. To be useful, novel information must have a particular relationship to existing organizational knowledge. It must be far enough away to qualify as novel, but it must be close enough that it can be understood and exploited. Therefore, a key challenge for novel-information discovery is to find concepts that have such relationships to a given starting point or focal concept of interest. Despite the potential benefits, organizations face a number of challenges discovering novel information on the Web: locating it, understanding its relevance, and making sense of it given the constraints and biases of existing mental models. In this paper, we develop an understanding of the challenges of novel information discovery and how a tool can support individuals in locating and translating novel information into novel ideas. Using a design science approach, we develop a design theory for novel-information discovery (NID). A prototype is developed and evaluated. Our findings show that an NID tool performs better than other Web search tools such as Google in terms of the perceived levels of novel information provided and radicalness of the ideas generated.
|Rahul Basole and Marcus Bellamy||
Supply Network Structure, Visibility, and Risk Diffusion: A Computational Approach
Abstract:Understanding and managing supply chain risks is a critical functional competency for today’s global enterprises. A lack of this competency can have significant negative outcomes, including costly production and delivery delays, loss of future sales, and a tarnished corporate image. The ability to identify and mitigate risks, however, is complicated as supply chains are becoming increasingly global, complex, and interconnected. Drawing on the complex systems and epidemiology literature, and using a computational modeling and network analysis approach, we examine the impact of global supply network structure on risk diffusion and supply network health and demonstrate the importance of supply network visibility. Our results show a significant association between network structure and both risk diffusion and supply network health. In particular, our results indicate that small-world supply network topologies consistently outperform supply networks with scale-free characteristics. Theoretically, our study contributes to our understanding of risk management and supply networks as complex networked systems using a computational approach. Managerially, our study illustrates how decision makers can benefit from a network analytic approach to develop a more holistic understanding of system-wide risk diffusion and to guide network governance policies for more favorable health level outcomes. The paper concludes by highlighting the main findings and discussing possibilities of future research directions.
|Dongli Zhang, Kevin Linderman, and Roger Schroeder||
Customizing Quality Management Practices: A Conceptual and Measurement Framework
Abstract:Quality Management has often been promoted as a “universal remedy,” where organizations adopt these practices to enhance performance. However, implementation of Quality Management has led to mixed results with some high profile failures. Some suggest that customizing Quality Management practices to fit the organization’s situational context can help avoid implementation failure and improve performance. However, research has not fully investigated how organizations should go about customizing quality practices. This paper addresses this question by conceptualizing two different fundamental aspects of QM practices that have different learning objectives: quality exploitation (QEI) and quality exploration (QER). Drawing on experts and empirical data, we develop a reliable and valid set of measures for QEI and QER. Furthermore, the analysis shows the performance differences in the two sets of QM practices across different contextual settings. Specifically, the empirical results show the benefits of different QM orientations depend on the level of competition and rate of product change. This research challenges prior conceptualizations of QM, and suggests a practical framework to guide decision makers in customizing QM practices.
|Srimathy Mohan, Ferdous Alam, John Fowler, Mohan Gopalakrishnan, and Antonios Printezis||
Capacity Planning and Allocation for Web-based Applications
Abstract:Motivated by the technology division of a financial services firm, we study the problem of capacity planning and allocation problem for Web-based applications. The steady growth in Web traffic has affected the quality of service (QoS) as measured by response time, for numerous e-businesses. In addition, the lack of understanding of system interactions and availability of proper planning tools has impeded effective capacity management. Managers typically make decisions to add server capacity on an ad-hoc basis when systems reach critical response levels. Very often this turns out to be too late and results in extremely long response times and system crashes. We present an analytical model to understand system interactions with the goal of making better server capacity decisions based on the results. The model studies the relationships and important interactions between the various components of a Web-based application using a continuous time Markov chain embedded in a queuing network as the basic framework. We use several structured aggregation schemes to appropriately represent a complex system, and demonstrate how the model can be used to quickly predict system performance which facilitates effective capacity allocation decision making. Using simulation as a benchmark, we show that our model produces results within 5% accuracy at a fraction of the time of simulation, even at high traffic intensities. This knowledge helps managers quickly analyze the performance of the system and better plan server capacity to maintain desirable levels of QoS. We also demonstrate how to utilize a combination of dedicated and shared resources to achieve QoS using fewer servers.
|Stefan Spinler and Sebastian Huber||
Pricing of full-service repair contracts with learning, preventive maintenance, and information asymmetry
Abstract:This paper considers the optimal pricing of full-service repair contracts by taking into account learning and maintenance efficiency effects, competition from service providers, and asymmetric information. We analyze on-call service (OS) and full service (FS) contracts in a market where customers exhibit heterogeneous risk aversion. While the customers minimize their disutility over the equipment lifetime, the service provider maximizes expected profits arising from the portfolio of OS and FS contracts. We show that the optimal FS price depends inter alia on the customer's prior cost experience and on OS repair and maintenance costs. The optimal FS price is shown to increase as fewer OS customers are lost to competition, whereas improved repair learning enabled by FS reduces the optimal price. A numerical study based on data from a manufacturer of forklifts highlights the importance of learning in maintenance operations, which constitutes the key benefit of FS contracts; 81% of the customers select the FS option and are willing to pay an insurance premium of around 1.5% of total OS cost against volatility of repair costs.
|Antti Tenhiala and Fabrizio Salvador||
Looking Inside Glitch Mitigation Capability: The Effect of Intra-Organizational Communication Channels
Abstract:Manufacturers can reduce the occurrence of glitches in their operations by building capabilities to prevent them, yet mitigation capabilities are also needed to contain the effects of the glitches that will still inevitably occur every now and then. We examine the glitch mitigation capability of a production process from an information-processing perspective and propose that (i) the impact of operational glitches on delivery performance is contingent on the formalization of intra-firm communication channels and (ii) this effect is stronger when formal communication channels are complemented with informal channels. We test our model in a sample of 163 make-to-order production processes and find support for the first hypothesis and partial support for the second hypothesis. The statistical analyses also reveal non-hypothesized empirical regularities, which we explore through an additional qualitative study based on 34 site visits and 30 interviews with production planners. The results have practical implications for the design of intra-organizational communication channels, and they also contribute to the research on organizational resilience and communications by showing that when coping with disruptions, the formal communication channels have advantages that are seldom discussed in the literature or recognized by practitioners.
|Claudia Rosales, Michael Magazine, and Uday Rao||
Point-of-Use Hybrid Inventory Policy for Hospitals
Abstract:Modern point-of-use technology at hospitals has enabled new replenishment policies for medical supplies. One of these new policies, which we call the hybrid policy, is currently in use at a large US Midwest hospital. The hybrid policy combines a low-cost periodic replenishment epoch with a high-cost continuous replenishment option to avoid costly stockouts. We study this new hybrid policy under deterministic and stochastic demand. We develop a parameter search engine using simulation to optimize the long-run average cost per unit time and, via a computational study, we provide insights on the benefits (reduction in cost, inventory, and number of replenishments) that hospitals may obtain by using the hybrid policy instead of the commonly-used periodic policies. We also use the optimal hybrid policy parameters from the deterministic analysis to propose approximate expressions for the stochastic hybrid policy parameters that can be easily used by hospital management.
|Babak Abbasi and S. Zahra Hosseinifard||
On the Issuing Policies for Perishable Items such as Red Blood Cells and Platelets in Blood Service
Abstract:Red blood cells (RBCs) and platelets are examples of perishable items with a fixed shelf life. Recent studies show that transfusing fresh RBCs may lead to an improvement of patient outcomes. In addition, to better manage their inventory, hospitals prefer to receive fresh RBCs and platelets. Therefore, as well as minimizing outdates and shortages, reducing the average age of issue is a key performance criterion for blood banks. The issuing policy in a perishable inventory system has a substantial impact on the age of issue and outdate and shortage rates. Although several studies have compared the last in first out (LIFO) and the first in first out (FIFO) policies for perishable products, only a few studies have considered the situation of blood banks where replenishment is not controllable. In this study, we examine various issuing policies for a perishable inventory system with uncontrollable replenishment, and outline a modified FIFO policy. Our proposed modified FIFO policy partitions the inventory into two parts such that the first part holds the items with age less than a threshold. It then applies the FIFO policy in each part and the LIFO policy between the parts. We present two approximation techniques to estimate the average age of issue, the average time between successive outdates and the average time between successive shortages of the modified FIFO policy. Our analysis shows in several cases that where the objective function is a single economic function, or it is formulated as a multi-objective model, the modified FIFO policy outperforms the FIFO and LIFO policies.
Failure Risk and Quality Cost Management in Single versus Multiple Sourcing Decision
Abstract:The advantage of multiple sourcing to protect against supplier failures arising from undependable products due to latent defects is examined using a model with non-linear external failure costs. Prior research has focused only on supplier failures arising from unreliable supply, such as late/insufficient/no delivery. I derive a closed-form characterization of the optimal production quota allocation for the LUX (Latent defect-Undependable product-eXternal failure) setting. The allocation determines the optimal supply base, with intuitive properties that hold under a mild requirement. The requirement includes the special case of equal procurement costs charged by suppliers but also allows unequal costs without any particular order. The key result of the paper is a necessary and sufficient condition determining whether single or multiple sourcing is optimal. Another condition is obtained to determine the exact size of the optimal supply base, provided the mild requirement holds. With minor modifications, the results also hold when a buyer-initiated procurement contract can be used to elicit private information on the suppliers’ unit variable production costs.
|Agnes Lubloy, Gyula Vastag, and Gabor Benedek||
Churn Models at Mobile Providers: Importance of Social Embeddedness
Abstract:This article argues the importance of social embeddedness at mobile providers by examining the effects of customers’ network topological properties on churn probability—the probability of a customer switching from one telecommunication provider to another. This article uses data from regional snowball sampling—the only practically feasible network sampling method—to identify groups with significantly different churn ratios for customers with different network topological properties. Clear evidence indicates that individual network characteristics (node-level metrics) have considerable impact on churn probabilities. The inclusion of network-related measures in the churn model allows a longer-term projection of churners and improves the predictive power of the model. With no possibility to carry out repeated sampling, sample stability was checked through simulation results. On the one hand, this article highlights the importance and effectiveness of the provider’s tailored marketing campaigns by showing that customers targeted by direct marketing campaigns are less threatened by churn than non-targeted customers. On the other, this article shows that social embeddedness blocks the impact of the very same marketing efforts. This article forwards the idea that social embeddedness, also prevalent in vendor switching, can be extended to understanding the development of professional societies threatened by membership churn.
|Subhamoy Ganguly, Stephen Lawrence, and Mark Prather||
Emergency Department Staff Planning to Improve Patient Care and Reduce Costs
Abstract:In the face of high staffing costs, uncertain patient arrivals, and patients unsatisfied with long wait-times, staffing of medical emergency departments (EDs) is a vexing problem. Using empirical data collected from three active EDs, we develop an analytic model to provide effective staffing schedules for EDs. Patient demand is aggregated into discrete time buckets and used to model the stochastic distribution of patient demand within these buckets, which considerably improves model tractability. This model is capable of scheduling providers with different skill-profiles who work either individually or in teams, and with patients of varying acuity-levels. We show how our model helps to balance staffing costs and patient service levels, and how it facilitates examination of important ED staffing policies.
|Chih-Ping Wei, Chin-Sheng Yang, and Yu-Hsun Chiang||
Exploiting Technological Indicators for Effective Technology Merger and Acquisition (M&A) Predictions
Abstract:Mergers and acquisitions (M&A) play increasingly important roles for contemporary business, especially in high-tech industries that conduct M&As to pursue complementarity from other companies and thereby preserve or extend their competitive advantages. The appropriate selection (prediction) of M&A targets for a given bidder company constitutes a critical first step for an effective technology M&A activity. Yet existing studies only employ financial and managerial indicators when constructing M&A prediction models, and select candidate target companies without considering the profile of the bidder company or its technological compatibility with candidate target companies. Such limitations greatly restrict the applicability of existing studies to supporting technology M&A predictions. To address these limitations, we propose a technology M&A prediction technique that encompasses technological indicators as independent variables and accounts for the technological profiles of both bidder and candidate target companies. Forty-three technological indicators are derived from patent documents and an ensemble learning method is developed for our proposed technology M&A prediction technique. Our evaluation results, on the basis of the M&A cases between January 1997 and May 2008 that involve companies in Japan and Taiwan, confirm the viability and applicability of the proposed technology M&A prediction technique. In addition, our evaluation also suggests that the incorporation of the technological profiles and compatibility of both bidder and candidate target companies as predictors significantly improves the effectiveness of relevant predictions.