Showing papers in "Production and Operations Management in 2014"

Competitive Quality Choice and Remanufacturing

Abstract: We consider an original equipment manufacturer (OEM) who faces competition from an independent remanufacturer (IR). The OEM decides the quality of the new product, which also determines the quality of the competing remanufactured product. The OEM and the IR then competitively determine their production quantities. We explicitly characterize how the OEM competes with the IR in equilibrium. Specifically, we show that the OEM relies more on quality as a strategic lever when it has a stronger competitive position (determined by the relative cost and value of new and remanufactured products), and in contrast it relies more heavily on limiting quantity of cores when it has a weaker competitive position. The IR's entry threat as well as its successful entry can decrease the consumer surplus. Furthermore, our results illustrate that ignoring the competition or the OEM's quality choice leads to overestimating benefits of remanufacturing for consumer and social welfare. In addition, we show an IR with either a sufficiently weak competitive position (so the OEM deters entry) or a sufficiently strong one (so the OEM is forced to limit quantity of cores) is desirable for reducing the environmental impact. Comparing our results with the benchmark in which the OEM remanufactures suggests that encouraging IRs to remanufacture in lieu of the OEMs may not benefit the environment. Furthermore, the benchmark illustrates that making remanufacturing more attractive improves the environmental impact when the remanufacturer is the OEM, while worsening it when remanufacturing is done by the IR.

First Step in Social Media: Measuring the Influence of Online Management Responses on Customer Satisfaction

Abstract: With the growing influence of online social media, firms increasingly take an active role in interacting with consumers in social media. For many firms, their first step in online social media is management responses, where the management responds to customers' comments about the firm or its products and services. In this article, we measure the impact of management responses on customer satisfaction using data retrieved from a major online travel agency in China. Applying a panel data model that controls for regression toward the mean and heterogeneity in individual preference for hotels, we find that online management responses are highly effective among low satisfaction customers but have limited influence on other customers. Moreover, we show that the public nature of online management responses introduces a new dynamic among customers. Although online management responses increase future satisfaction of the complaining customers who receive the responses, they decrease future satisfaction of complaining customers who observe but do not receive management responses. The result is consistent with the peer-induced fairness theory.

Assortment Optimization under the Multinomial Logit Model with Random Choice Parameters

Abstract: We consider assortment optimization problems under the multinomial logit model, where the parameters of the choice model are random. The randomness in the choice model parameters is motivated by the fact that there are multiple customer segments, each with different preferences for the products, and the segment of each customer is unknown to the firm when the customer makes a purchase. This choice model is also called the mixture-of-logits model. The goal of the firm is to choose an assortment of products to offer that maximizes the expected revenue per customer, across all customer segments. We establish that the problem is NP complete even when there are just two customer segments. Motivated by this complexity result, we focus on assortments consisting of products with the highest revenues, which we refer to as revenue-ordered assortments. We identify specially structured cases of the problem where revenue-ordered assortments are optimal. When the randomness in the choice model parameters does not follow a special structure, we derive tight approximation guarantees for revenue-ordered assortments. We extend our model to the multi-period capacity allocation problem, and prove that, when restricted to the revenue-ordered assortments, the mixture-of-logits model possesses the nesting-by-fare-order property. This result implies that revenue-ordered assortments can be incorporated into existing revenue management systems through nested protection levels. Numerical experiments show that revenue-ordered assortments perform remarkably well, generally yielding profits that are within a fraction of a percent of the optimal.

Order stability in supply chains: : coordination risk and the role of coordination stock

Abstract: The bullwhip effect describes the tendency for the variance of orders in supply chains to increase as one moves upstream from consumer demand. Previous research attributes this phenomenon to both operational and behavioral causes. We report on a set of laboratory experiments with a serial supply chain, using the Beer Distribution Game. The experimental conditions eliminate all operational causes of the bullwhip effect. Nevertheless, we find that the bullwhip effect persists in this setting and offer one possible explanation based on coordination risk. Coordination risk exists when individuals’ decisions contribute to a collective outcome and the decision rules followed by each individual are not known with certainty, e.g., where managers cannot be sure how their supply chain partners will behave. We conjecture that the existence of coordination risk may contribute to bullwhip behavior. We test this conjecture by controlling for environmental factors that lead to coordination risk and find these controls lead to significant reduction in order oscillations and amplification. Next, we investigate a managerial intervention to reduce the bullwhip effect, inspired by our conjecture that coordination risk contributes to bullwhip behavior. While the intervention, holding additional on-hand inventory, does not change the existence of coordination risk, we find that it reduces order oscillation and amplification by providing a buffer against the endogenous risk of coordination failure. We conclude that the magnitude of the bullwhip can be mitigated, but that its behavioral causes appear robust.

The Roles of Bank and Trade Credits: Theoretical Analysis and Empirical Evidence

Abstract: This study investigates the roles of bank and trade credits in a supply chain with a capital-constrained retailer facing demand uncertainty. We evaluate the retailer's optimal order quantity and the creditors' optimal credit limits and interest rates in two scenarios. In the single-credit scenario, we find the retailer prefers trade credit, if the trade credit market is more competitive than the bank credit market; otherwise, the retailer's preference of a specific credit type depends on the risk levels that the retailer would divert trade credit and bank credit to other risky investments. In the dual-credit scenario, if the bank credit market is more competitive than the trade credit market, the retailer first borrows bank credit prior to trade credit, but then switches to borrowing trade credit prior to bank credit as the retailer's internal capital declines. In contrast, if the trade credit market is more competitive, the retailer borrows only trade credit. We further analytically prove that the two credits are complementary if the retailer's internal capital is substantially low but become substitutable as the internal capital grows, and then empirically validate this prediction based on a panel of 674 firms in China over the period 2001�2007.

Browse-and-Switch: Retail-Online Competition under Value Uncertainty

Abstract: Although online shopping is becoming popular, consumers who are unsure about whether to buy a product may find it advantageous to visit a brick-and-mortar retail store to first examine the product before purchasing it. But, after browsing at the store, consumers have the option of switching to an e-tailer to purchase the item at a cheaper price rather than buying at the store. Recent business press refers to this browse-and-switch behavior as “showrooming,” and attributes to it the declining profits of brick-and-mortar retailers. To study the effect of the browse-and-switch option on retail and online pricing strategies and profits, we analyze a stylized economic model that incorporates uncertainty in consumers' valuation of the product, captures the heterogeneity among consumers in their inclination to purchase online, and permits product returns. We consider various equilibrium scenarios for different combinations of consumer shopping behaviors, characterize the parameter ranges for each scenario, and demonstrate that browse-and-switch behavior can indeed occur under equilibrium. Our analysis further shows that the option for consumers to browse-and-switch intensifies competition, reducing the profits for both firms.

Appointment scheduling with no-shows and overbooking

Abstract: We study an overbooking model for scheduling arrivals at a medical facility under no-show behavior, with patients having different no-show probabilities and different weights. The scheduler has to assign the patients to time slots in such a way that she minimizes the expected weighted sum of the patients' waiting times and the doctor's idle time and overtime. We first consider the static problem, where the set of patients to be scheduled and their characteristics are known in advance. We partially characterize the optimal schedule and introduce a new sequencing rule that schedules patients according to a single index that is a function of their characteristics. Then we apply our theoretical results and conclusions from numerical experiments to sequential scheduling procedures. We propose a heuristic solution to the sequential scheduling problem, where requests for appointments come in gradually over time and the scheduler has to assign each patient to one of the remaining slots that are available in the schedule for a given day. We find that the no-show rate and patients' heterogeneity have a significant impact on the optimal schedule and should be taken under consideration.

The Effects of Competitive Environment on Supply Chain Information Sharing and Performance: An Empirical Study in China

Abstract: Information sharing in supply chains has become an important topic over the past decade. This study uses data from 617 Chinese manufacturing firms to investigate the relationships among competitive environments, supply chain information sharing (SCIS), and supply chain performance. The results of structural equation modeling analysis show that (i) international competition is positively related to all three types of SCIS whereas local competition is not significantly related to any of the three types, (ii) internal information sharing is positively related to external information sharing with suppliers and customers, and (iii) internal information sharing and information sharing with customers are positively related to superior supply chain performance, whereas supplier information sharing is not significantly related to performance. The findings enhance our understanding of the relationships among competitive environment, SCIS, and supply chain performance in Chinese manufacturing settings.

Distributional and Peer-Induced Fairness in Supply Chain Contract Design

Abstract: Members of a supply chain often make profit comparisons. A retailer exhibits peer-induced fairness concerns when his own profit is behind that of a peer retailer interacting with the same supplier. In addition, a retailer exhibits distributional fairness when his supplier's share of total profit is larger than his own. While existing research focuses exclusively on distributional fairness concerns, this study investigates how both types of fairness might interact and influence economic outcomes in a supply chain. We consider a one-supplier and two-retailer supply chain setting, and we show that (i) in the presence of distributional fairness alone, the wholesale price offer is lower than the standard wholesale price offer; (ii) in the presence of both types of fairness, the second wholesale price is higher than the first wholesale price; and (iii) in the presence of both types of fairness, the second retailer makes a lower profit and has a lower share of the total supply chain profit than the first retailer. We run controlled experiments with subjects motivated by substantial monetary incentives and show that subject behaviors are consistent with the model predictions. Structural estimation on the data suggests that peer-induced fairness is more salient than distributional fairness.

The strategic role of third-party marketplaces in retailing

Abstract: Retailers are increasingly adopting a dual-format model. In addition to acting as traditional merchants (buying and reselling goods), these retailers provide a platform for third-party (3P) sellers to access and compete for the same customers. We investigate the strategic rationale for a retailer to introduce a 3P marketplace. Our analysis provides insights into the growing prevalence of 3P marketplaces. We show that by committing to having an active 3P marketplace, the retailer creates an �outside option� that improves its bargaining position in negotiations with the manufacturer. This can explain the increasing prevalence of such marketplaces. On the other hand, the manufacturer would prefer to eliminate the retailer's outside option and should seek to limit or prevent sales through 3P marketplaces. This is consistent with actions that several manufacturers have taken to limit such sales. Interestingly, if the manufacturer fails to eliminate sales of competing products through the 3P marketplace, then the best strategy for the manufacturer is to allow the retailer to dictate the terms of their contract. This is because a powerful retailer will rely less on its outside option in generating profit, and therefore it will increase the fees charged to 3P sellers and soften the competition between 3P sellers and the manufacturer. The decrease in competition will lead to an increase in the value of outside option of the manufacturer and improve its profit. Additionally, we find that the presence of a 3P marketplace benefits consumers, but this benefit diminishes as the retailer becomes more powerful.

Information diffusion among agents: : implications for humanitarian operations

Abstract: The basis for this article is an information-processing view of the UN's cluster approach. We use agent-based modeling and simulations to show that clusters, if properly utilized, encourage better information flow and thus facilitate effective response to disasters. The article intends to turn the attention of the humanitarian community to the importance of sharing information and the role of cluster leads in facilitating humanitarian aid. Our results indicate that if cluster leads act as information hubs, information reaches its target faster, enabling a prompt humanitarian response. In addition, we show that information quality is critical for effective resource utilization-if cluster leads filter information, it moves faster. We also found evidence that the willingness to exchange information plays a larger role in transmitting information than that of an information hub, particularly during later stages of response operations.

Strategic Motive for Introducing Internet Channels in a Supply Chain

Abstract: Rapid advances of information technology in recent years have enabled both the manufacturers and the retailers to operate their own Internet channels. In this study, we investigate the interaction between the capabilities of introducing the Internet channels, the pricing strategies, and the channel structure. We classify consumers into two segments: grocery shoppers attach a higher utility from purchasing through the physical channel, whereas a priori Internet shoppers prefer purchasing online. We find that when the Internet shoppers are either highly profitable or fairly unimportant, the manufacturer prefers to facilitate the channel separation either through his own Internet channel or the retailer's. In the intermediate region, however, the manufacturer encroaches the grocery shoppers and steals the demand from the retailer's physical channel. With horizontal competition between retailers, a priori symmetric retailers may adopt different channel strategies as a stable market equilibrium. The manufacturer may willingly give up his Internet channel and leverage on the retailer competition. When the manufacturer sells through an online e-tailer, Internet shoppers may be induced to purchase through the physical channel. This reverse encroachment strategy emerges because selling through the e-tailer leads to a more severe double marginalization problem.

Managing Disruptions in Decentralized Supply Chains with Endogenous Supply Process Reliability

Abstract: Supply disruptions are all too common in supply chains. To mitigate delivery risk, buyers may either source from multiple suppliers or offer incentives to their preferred supplier to improve its process reliability. These incentives can be either direct (investment subsidy) or indirect (inflated order quantity). In this study, we present a series of models to highlight buyers’ and suppliers’ optimal parameter choices. Our base-case model has deterministic buyer demand and two possibilities for the supplier yield outcomes: all-or-nothing supply or partial disruption. For the all-or-nothing model, we show that the buyer prefers to only use the subsidy option, which obviates the need to inflate order quantity. However, in the partial disruption model, both incentives—subsidy and order inflation—may be used at the same time. Although single sourcing provides greater indirect incentive to the selected supplier because that avoids order splitting, we show that the buyer may prefer the diversification strategy under certain circumstances. We also quantify the amount by which the wholesale price needs to be discounted (if at all) to ensure that dual sourcing strategy dominates sole sourcing. Finally, we extend the model to the case of stochastic demand. Structural properties of ordering/subsidy decisions are derived for the all-or-nothing model, and in contrast to the deterministic demand case, we establish that the buyer may increase use of subsidy and order quantity at the same time.

Wholesale pricing under mild and privately known concerns for fairness

Abstract: This article studies the performance of wholesale pricing when the supply chain partners' fairness concerns are private information. We find that some properties of wholesale pricing established under complete information hold under incomplete information as well. First, wholesale pricing can coordinate the supply chain, despite the information asymmetry, when fairness concerns are strong enough. Second, in the case when an equitable profit split does not imply that the retailers profit must be higher than that of the supplier, the suppliers' equilibrium offer is never rejected. Overall, the study makes two primary contributions. First, it provides a partial characterization of the equilibrium when the conditions required for coordination do not hold, that is, when fairness concerns are mild. In this case, the model predicts that the expected market price must be exactly the same as under complete information. The channel efficiency, nevertheless, is strictly lower than under complete information. The distribution-free lower bound on channel efficiency suggests that this efficiency loss should be quite small, though. Second, it provides an experimental test of the models' predictions as well as a direct validation of the assumptions of preferences heterogeneity and mildness by obtaining the empirical distribution of the preferences.

Assessing trade-offs among multiple objectives for humanitarian aid delivery using expert preferences.

Abstract: Humanitarian aid agencies deliver emergency supplies and services to people affected by disasters. Scholars and practitioners have developed modeling approaches to support aid delivery planning, but they have used objective functions with little validation as to the trade-offs among the multiple goals of aid delivery. We develop a method to value the performance of aid delivery plans based on expert preferences over five key attributes: the amount of cargo delivered, the prioritization of aid by commodity type, the prioritization of aid by delivery location, the speed of delivery, and the operational cost. Through a conjoint analysis survey, we measure the preferences of 18 experienced humanitarian logisticians. The survey results quantify the importance of each attribute and enable the development of a piecewise linear utility function that can be used as an objective function in optimization models. The results show that the amount of cargo delivered is the most valued objective and cost the least important. In addition, experts prioritize more vulnerable communities and more critical commodities, but not to the exclusion of others. With these insights and the experts' utility functions, better humanitarian objective functions can be developed to enable better aid delivery in emergency response.

Improving Humanitarian Operations through Technology-Enabled Collaboration

Abstract: Humanitarian supply chains involve many different entities, such as government, military, private, and non-governmental organizations and individuals. Well-coordinated interactions between entities can lead to synergies and improved humanitarian outcomes. Information technology (IT) tools can help facilitate collaboration, but cost and other barriers have limited their use. We document the use of an IT tool to improve last-mile supply distribution and data management in one of many camps for internally displaced persons after the January 2010 earthquake in Haiti, and we describe other current uses of technology in camp management. Motivated by these examples and the interest among humanitarian organizations in expanding the use of such tools to facilitate coordination, we introduce a cooperative game theory model and explore insights about the conditions under which multi-agency coordination is feasible and desirable. We also outline an agenda for future research in the area of technology-enabled collaboration in the humanitarian sector.

Advertising in Asymmetric Competing Supply Chains

Abstract: Advertising is a crucial tool for demand creation and market expansion. When a manufacturer uses a retailer as a channel for reaching end customers, the advertising strategy takes on an additional dimension: which party will perform the advertising to end customers. Cost sharing (�co-operative advertising�) arrangements proliferate the option by decoupling the execution of the advertising from its funding. We examine the efficacy of cost sharing in a model of two competing manufacturer�retailer supply chains who sell partially substitutable products that may differ in market size. Some counterintuitive findings suggest that the firms performing the advertising would rather bear the costs entirely if this protects their unit profit margin. We also evaluate the implications of advertising strategy for overall supply chain efficiency and consumer welfare.

Economic and Environmental Assessment of Remanufacturing Strategies for Product + Service Firms

Abstract: This article provides a data-driven assessment of economic and environmental aspects of remanufacturing for product + service firms. A critical component of such an assessment is the issue of demand cannibalization. We therefore present an analytical model and a behavioral study which together incorporate demand cannibalization from multiple customer segments across the firm's product line. We then perform a series of numerical simulations with realistic problem parameters obtained from both the literature and discussions with industry executives. Our findings show that remanufacturing frequently aligns firms' economic and environmental goals by increasing profits and decreasing the total environmental impact. We show that in some cases, an introduction of a remanufactured product leads to no changes in the new products' prices (positioning within the product line), implying a positive demand cannibalization and a decrease in the environmental impact; this provides support for a heuristic approach commonly used in practice. Yet in other cases, the firm can increase profits by decreasing the new product's prices and increasing sales�a negative effective cannibalization. With negative cannibalization the firm's total environmental impact often increases due to the growth in new production. However, we illustrate that this growth is nearly always sustainable, as the relative environmental impacts per unit and per dollar rarely increase.

Introduction to the Special Issue on Humanitarian Operations and Crisis Management

Abstract: The Genesis of this Special Issue came from the Board of the POMS College on Humanitarian Operations and Crisis Management (HO&CM). It was seen as a necessary initiative to define the field and examine research opportunities. This Special Issue shows that humanitarian operations pose challenges for P/OM researchers and practitioners that differ markedly from those of conventional supply chains associated with profitable enterprises. On the basis of the eight articles in this Special Issue, we have described and demonstrated the unique characteristics of the POM/HO&CM interaction. We have also identified those attributes that tend to overlap with conventional aspects of POM. In addition to wanting to be cost effective, the issue of equity fairness is pervasive in humanitarian operations, and so is the need to always base considerations on �last-mile logistics,� that is, getting aid to those in most need. Research is essential to determine how to train researchers to scout out and map the territory of the real problems. One of the most vexing problems is the lack of robust data in the humanitarian domain which is as richly varied as the types of disasters that can occur.

Supply-Chain Research Opportunities with the Poor as Suppliers or Distributors in Developing Countries

Abstract: Many social enterprises and some companies have developed supply chains with the poor as suppliers or distributors to alleviate poverty and to create revenues for themselves. Such supply chains have created new research opportunities because they raise issues fundamentally different from those examined in the existing operations management literature. We report this phenomenon of supply chains with the poor as suppliers or distributors in developing countries and identify operations management (OM) research opportunities. We also provide some stylized models to serve as potential seeds for modeling-based research in this area.

Supplier Selection for Framework Agreements in Humanitarian Relief

Abstract: In this study, we consider the supplier selection problem of a relief organization that wants to establish framework agreements (FAs) with a number of suppliers to ensure quick and cost-effective procurement of relief supplies in responding to sudden-onset disasters. Motivated by the FAs in relief practice, we focus on a quantity flexibility contract in which the relief organization commits to purchase a minimum total quantity from each framework supplier over a fixed agreement horizon, and, in return, the suppliers reserve capacity for the organization and promise to deliver items according to pre-specified agreement terms. Due to the uncertainties in demand locations and amounts, it may be challenging for relief organizations to assess candidate suppliers and the offered agreement terms. We use a scenario-based approach to represent demand uncertainty and develop a stochastic programming model that selects framework suppliers to minimize expected procurement and agreement costs while meeting service requirements. We perform numerical experiments to understand the implications of agreement terms in different settings. The results show that supplier selection decisions and costs are generally more sensitive to the changes in agreement terms in settings with high-impact disasters. Finally, we illustrate the applicability of our model on a case study.

Collaborative Product Development: The Effect of Project Complexity on the Use of Information Technology Tools and New Product Development Practices

Abstract: Collaboration is an essential element of new product development (NPD). This research examines the associations between four types of information technology (IT) tools and NPD collaboration. The relationships between NPD practices and NPD collaboration are also examined. Drawing on organizational information processing theory, we propose that the relationships between IT tools and NPD collaboration will be moderated differently by three project complexity dimensions, namely, product size, project novelty, and task interdependence, due to the differing nature of information processing necessitated by each project complexity dimension. Likewise, the moderation effects of the project complexity dimensions on the relationship between NPD practices and NPD collaboration will also be different. We test our hypotheses using data from a sample of NPD projects in three manufacturing industries. We find that IT tools are associated with collaboration to a greater extent when product size is relatively large. In contrast, IT tools exhibit a smaller association with collaboration when project novelty or task interdependence is relatively high. NPD practices are found to be more significantly associated with NPD collaboration under the contingency of high project novelty or high task interdependence. The findings provide insights about circumstances where several popular IT tools are more likely to facilitate collaboration, thus informing an NPD team's IT adoption and use decisions.

Firms' R&D Cooperation Behavior in a Supply Chain

Abstract: This study investigates firms' R&D cooperation behavior in a supply chain where two firms first cooperate in R&D investments and then decide the production quantity according to a wholesale price contract. By using a concept named contribution level that measures a firm's technological contribution to the R&D cooperation in the supply chain, we show that both firms can achieve win�win via cartelization only if their contribution levels are Pareto matched, i.e., when each firm's contribution level is comparable to its partner's. When spillovers are endogenized, we further establish that an increasing spillover always benefits both firms without any R&D cooperation, but only benefits the firm whose contribution level is relatively low when under R&D cartels. Finally, we show that the path of first increasing spillovers to be perfect and then forming a cartel has a higher chance of achieving the best mode in terms of profitability.

Using fairness models to improve equity in health delivery fleet management

Abstract: Inefficiency and inequity are two challenges that plague humanitarian operations and health delivery in resource-limited regions. Increasing capacity in humanitarian and health delivery supply chains is one option that has the potential to improve equity while maintaining efficiency. For example, the nonprofit organization Riders for Health has worked to increase capacity by providing reliable transportation to health workers in rural parts of sub-Saharan Africa; with more motorcycle hours at their disposal, health workers can perform more outreach to outlying communities. We develop a model using a family of fairness function to quantify the efficiency and equity of health delivery as capacity is increased via development programs. We present optimal resource allocations under utilitarian, proportionally fair, and egalitarian objectives and extend the model to include dual modes of transport and diminishing returns of subsequent outreach visits. Finally, we demonstrate how to apply our model at a regional level to provide support for humanitarian decision makers such as Riders for Health. We use data from the baseline phase of our evaluation trial of Riders for Health in Zambia to quantify efficiency and equity for one real-world scenario.

Panel Size and Overbooking Decisions for Appointment-Based Services under Patient No-Shows

Abstract: Many service systems that work with appointments, particularly those in healthcare, suffer from high no-show rates. While there are many reasons why patients become no-shows, empirical studies found that the probability of a patient being a no-show typically increases with the patient's appointment delay, i.e., the time between the call for the appointment and the appointment date. This paper investigates how demand and capacity control decisions should be made while taking this relationship into account. We use stylized single server queueing models to model the appointments scheduled for a provider, and consider two different problems. In the first problem, the service capacity is fixed and the decision variable is the panel size; in the second problem, both the panel size and the service capacity (i.e., overbooking level) are decision variables. The objective in both cases is to maximize some net reward function, which reduces to system throughput for the first problem. We give partial or complete characterizations for the optimal decisions, and use these characterizations to provide insights into how optimal decisions depend on patient's no-show behavior in regards to their appointment delay. These insights especially provide guidance to service providers who are already engaged in or considering interventions such as sending reminders in order to decrease no-show probabilities. We find that in addition to the magnitudes of patient show-up probabilities, patients' sensitivity to incremental delays is an important determinant of how demand and capacity decisions should be adjusted in response to anticipated changes in patients' no-show behavior.

Vehicle Supply Chains in Humanitarian Operations: Decentralization, Operational Mix, and Earmarked Funding

Abstract: The work of international humanitarian organizations (IHOs) frequently involves operating in remote locations, decentralized decision-making, and the simultaneous implementation of development and disaster response programs. A large proportion of this work is funded by �earmarked� donations, since donors often exhibit a preference for the programs they are willing to fund. From extensive research involving qualitative descriptions and quantitative data, and applying system dynamics methodology, we model vehicle supply chains (VSCs) in support of humanitarian field operations. Our efforts encompass the often-overlooked decentralized environment by incorporating the three different VSC structures that IHOs operate, as well as examining the entire mix of development and disaster response programs, and the specific (and virtually unexplored) effects of earmarked funding. Our results suggest that earmarked funding causes a real�and negative�operational impact on humanitarian disaster response programs in a decentralized setting.

The Comparison of Two Vertical Outsourcing Structures under Push and Pull Contracts

Abstract: In a three-tier supply chain comprising an original equipment manufacturer (OEM), a contract manufacturer (CM), and a supplier, there exist two typical outsourcing structures: control and delegation. Under the control structure, the OEM contracts with the CM and the supplier respectively. Under the delegation structure, the OEM contracts with the CM only and the CM subcontracts with the supplier. We compare the two outsourcing structures under a push contract (whereby orders are placed before demand is realized) and a pull contract (whereby orders are placed after demand is realized). For all combinations of outsourcing structures and contracts, we derive the corresponding equilibrium wholesale prices, order quantities, and capacities. We find that the equilibrium production quantity is higher under control than under delegation for the push contract whereas the reverse holds for the pull contract. Both the OEM and the CM prefer control over delegation under the push contract. However, under the pull contract, the OEM prefers control over delegation whereas the CM and the supplier prefer delegation over control. We also show that for a given outsourcing structure, the OEM prefers the pull contract over the push contract. In extending our settings to a general two-wholesale-price (TWP) contract, we find that when wholesale prices are endogenized decision variables, the TWP contract under our setting degenerates to either a push or a pull contract.

Beyond Information Sharing: An Empirical Analysis of Vendor‐Managed Inventory

Abstract: Using a unique, item-level data set, we examined benefits to downstream firms (distributors) from the decision-transfer component of vendor-managed inventory (VMI), the feature that distinguishes VMI from other information-sharing, collaborative supply chain programs. Our major findings are that the decision-transfer component of VMI adds significant benefits to the downstream firm in terms of inventory and stockout reductions above and beyond information sharing, and that these two benefits may be realized at different times following VMI implementation; that is, inventory reduction, initially, may be the major benefit to distributors from VMI, while the benefits of stockout reduction may more likely be realized after the first year of implementation. In addition, VMI provides benefits to the upstream firm (manufacturer) by reducing the downstream firm's inventory variability, a likely contributor to the bullwhip effect. Based on our empirical analysis, the decision-transfer component of VMI, on average, reduces inventory levels by 7%, stockouts by 31%, and inventory variability by 9%.

Is Safe Production an Oxymoron

Abstract: This research examines how organizations simultaneously manage their operations and occupational health and safety. Although both safety and operations scholars conduct research in the same operational settings, they have reached different, yet untested, conclusions about the relationship between creating a safe workplace and creating a productive workplace. The results from a series of 10 case studies show that it is possible to create safe and productive workplaces, but that many facilities fail at this task because of problems associated with the culture management creates and the practices management adopts.

Strategic Sourcing in the Presence of Uncertain Supply and Retail Competition

Abstract: This study develops an analytical model to evaluate competing retail firms' sourcing strategies in the presence of supply uncertainty. We consider a common supplier that sells its uncertain supply to two downstream retail firms engaging in price competition in a horizontally differentiated product market. The focal firm has a dual-sourcing option, while the rival firm can only source from the common supplier. We assess the system-wide effects of supply uncertainty on the focal firm's incentive to pursue the dual-sourcing strategy. We find that the focal firm's dual-sourcing strategy can create a win�win situation that leads to increased retail prices and expected profits for both firms. Furthermore, under certain conditions, we show that it is beneficial for the focal firm to strategically source from the common supplier, even if its alternative supplier offers a lower wholesale price. Overall, we identify two types of incentives for adopting the dual-sourcing strategy: the incentive of mitigating supply risk through supplier diversification and the incentive of strategic sourcing for more effective retail competition.