scholarly journals Understanding the Value of Fulfillment Flexibility in an Online Retailing Environment

2021 ◽  
Author(s):  
Levi DeValve ◽  
Yehua Wei ◽  
Di Wu ◽  
Rong Yuan
Keyword(s):  
Theoretical Analysis ◽  
Numerical Simulations ◽  
Problem Definition ◽  
Order Fulfillment ◽  
Distribution Centers ◽  
Online Retailing ◽  
New Class ◽  
Managerial Implications ◽  
The Cost ◽  
Improve Service Quality

Problem definition: Fulfillment flexibility, the ability of distribution centers (DCs) to fulfill demand originating from other DCs, can help e-retailers reduce lost sales and improve service quality. Because the cost of full flexibility is prohibitive, we seek to understand the value of partially flexible fulfillment networks under simple and effective fulfillment policies. Academic/practical relevance: We propose a general method for understanding the practical value of (partial) fulfillment flexibility using a data-driven model, theoretical analysis, and numerical simulations. Our method applies to settings with local fulfillment (i.e., order fulfillment from the originating DC) prioritization and possible customer abandonment, two features that are new to the fulfillment literature. We then apply this method for a large e-retailer. We also introduce a new class of spillover limit fulfillment policies with attractive theoretical and practical features. Methodology: Our analysis uses dynamic and stochastic optimization, applied probability, and numerical simulations. Results: We derive optimal fulfillment policies in stylized settings, as well as bounds on the performance under an optimal policy using theoretical analysis, to provide guidelines on which policies to test in numerical simulations. We then use simulations to estimate for our industrial partner that a proposed fulfillment network with additional flexibility equates to a profit improvement on the order of tens of millions of U.S. dollars. Managerial implications: We provide an approach for e-retailers to understand when fulfillment flexibility is most valuable. We find that fulfillment flexibility provides the most benefit for our collaborator when gross profits are high relative to fulfillment costs or centrally held inventory is low. Also, we identify the risks of myopic fulfillment with additional flexibility and demonstrate that an effective spillover limit policy mitigates these risks.

Joint Product Framing (Display, Ranking, Pricing) and Order Fulfillment Under the Multinomial Logit Model for E-Commerce Retailers

2021 ◽  
Author(s):  
Yanzhe (Murray) Lei ◽  
Stefanus Jasin ◽  
Joline Uichanco ◽  
Andrew Vakhutinsky
Keyword(s):  
Large Scale ◽  
Matrix Decomposition ◽  
Multinomial Logit Model ◽  
Problem Definition ◽  
Order Fulfillment ◽  
Cardinality Constraints ◽  
Joint Product ◽  
Shipping Costs ◽  
Managerial Implications ◽  
Randomization Scheme

Problem definition: We study a joint product framing and order fulfillment problem with both inventory and cardinality constraints faced by an e-commerce retailer. There is a finite selling horizon and no replenishment opportunity. In each period, the retailer needs to decide how to “frame” (i.e., display, rank, price) each product on his or her website as well as how to fulfill a new demand. Academic/practical relevance: E-commerce retail is known to suffer from thin profit margins. Using the data from a major U.S. retailer, we show that jointly planning product framing and order fulfillment can have a significant impact on online retailers’ profitability. This is a technically challenging problem as it involves both inventory and cardinality constraints. In this paper, we make progress toward resolving this challenge. Methodology: We use techniques such as randomized algorithms and graph-based algorithms to provide a tractable solution heuristic that we analyze through asymptotic analysis. Results: Our proposed randomized heuristic policy is based on the solution of a deterministic approximation to the stochastic control problem. The key challenge is in constructing a randomization scheme that is easy to implement and that guarantees the resulting policy is asymptotically optimal. We propose a novel two-step randomization scheme based on the idea of matrix decomposition and a rescaling argument. Managerial implications: Our numerical tests show that the proposed policy is very close to optimal, can be applied to large-scale problems in practice, and highlights the value of jointly optimizing product framing and order fulfillment decisions. When inventory across the network is imbalanced, the widespread practice of planning product framing without considering its impact on fulfillment can result in high shipping costs, regardless of the fulfillment policy used. Our proposed policy significantly reduces shipping costs by using product framing to manage demand so that it occurs close to the location of the inventory.

Incentivized Actions in Freemium Games

2020 ◽  
Author(s):  
Lifei Sheng ◽  
Christopher Thomas Ryan ◽  
Mahesh Nagarajan ◽  
Yuan Cheng ◽  
Chunyang Tong
Keyword(s):  
Operations Management ◽  
Sufficient Conditions ◽  
Problem Definition ◽  
Data Set ◽  
New Class ◽  
Recent Innovation ◽  
Markov Decision ◽  
Managerial Implications ◽  
Operational Issues ◽  
Data Driven Decisions

Problem definition: Games are the fastest-growing sector of the entertainment industry. Freemium games are the fastest-growing segment within games. The concept behind freemium is to attract large pools of players, many of whom will never spend money on the game. When game publishers cannot earn directly from the pockets of consumers, they employ other revenue-generating content, such as advertising. Players can become irritated by revenue-generating content. A recent innovation is to offer incentives for players to interact with such content, such as clicking an ad or watching a video. These are termed incentivized (incented) actions. We study the optimal deployment of incented actions. Academic/practical relevance: Removing or adding incented actions can essentially be done in real-time. Accordingly, the deployment of incented actions is a tactical, operational question for game designers. Methodology: We model the deployment problem as a Markov decision process (MDP). We study the performance of simple policies, as well as the structure of optimal policies. We use a proprietary data set to calibrate our MDP and derive insights. Results: Cannibalization—the degree to which incented actions distract players from making in-app purchases—is the key parameter for determining how to deploy incented actions. If cannibalization is sufficiently high, it is never optimal to offer incented actions. If cannibalization is sufficiently low, it is always optimal to offer. We find sufficient conditions for the optimality of threshold strategies that offer incented actions to low-engagement users and later remove them once a player is sufficiently engaged. Managerial implications: This research introduces operations management academics to a new class of operational issues in the games industry. Managers in the games industry can gain insights into when incentivized actions can be more or less effective. Game designers can use our MDP model to make data-driven decisions for deploying incented actions.

Symbolic Awards in Buyer–Supplier Relations

2021 ◽  
Author(s):  
Ruth Beer ◽  
Hyun-Soo Ahn ◽  
Stephen Leider
Keyword(s):  
Laboratory Experiments ◽  
Problem Definition ◽  
Practical Relevance ◽  
Negative Effects ◽  
Bottom Line ◽  
Managerial Implications ◽  
The Cost ◽  
Behavioral Mechanisms ◽  
The Relationship ◽  
High Effort

Problem definition: Giving out a symbolic “supplier of the year” or “outstanding supplier” award can be beneficial for a buyer as it may incentivize a supplier to exert higher efforts. However, when a good supplier is scarce, the award announces which supplier is particularly good and may increase the cost of building and maintaining the relationship. This paper studies both positive and negative effects of a symbolic award and offers explanations on underlying behavioral mechanisms. Academic/practical relevance: We show that symbolic awards can effectively incentivize suppliers to provide high effort, improving a buyer’s bottom line. This is particularly relevant in cases in which certain aspects of a buyer–supplier relationship are not contractible and suppliers have discretion over the quality provided. The award format significantly influences the award’s effectiveness. Methodology: We develop a game-theoretical model that captures a supplier’s utility for the award in a competitive setting and test the predictions of the model with laboratory experiments. Results: Our experimental results confirm that private symbolic awards have motivating effects and lead to higher buyer profits. When the awards are public, this profit premium diminishes as buyers pay higher prices to get the good suppliers. When the buyer is given the option to make the award public or private, buyers prefer that awards are public over private, anticipating a negative supplier response to their choice of the private award format. Managerial implications: Expressing praise or gratitude for a supplier’s efforts can be highly beneficial for a buyer. However, when there is scarcity of good suppliers, buyers should expect increased competition and accompany the award with efforts to preserve the relationship. Finally, if buyers choose to offer a distinctive award format, private recognitions may be perceived as greedy or self-interested and backfire.

Unraveling Behavioral Ordering: Relative Costs and the Bullwhip Effect

2021 ◽  
Author(s):  
Brent B. Moritz ◽  
Arunachalam Narayanan ◽  
Chris Parker
Keyword(s):  
Supply Chain ◽  
Information Sharing ◽  
Human Behavior ◽  
Bullwhip Effect ◽  
Problem Definition ◽  
Supply Chain Costs ◽  
Cost Impact ◽  
Managerial Implications ◽  
The Cost ◽  
The Impact

Problem definition: We study the bullwhip effect and analyze the impact of human behavior. We separate rational ordering in response to increasing incoming orders from irrational ordering. Academic/practical relevance: Prior research has shown that the bullwhip effect occurs in about two-thirds of firms and impacts profitability by 10%–30%. Most bullwhip mitigation efforts emphasize processes such as information sharing, collaboration, and coordination. Previous work has not been able to separate the impact of behavioral ordering from rational increases in order quantities. Methodology: Using data from a laboratory experiment, we estimate behavioral parameters from three ordering models. We use a simulation to evaluate the cost impact of bullwhip behavior on the supply chain and by echelon. Results: We find that cost increases are not equally shared. Human biases (behavioral ordering) at the retailer results in higher relative costs elsewhere in the supply chain, even as similar ordering by a wholesaler, distributor, or factory results in increased costs within that echelon. These results are consistent regardless of the behavioral models that we consider. The cognitive profile of the decision maker impacts both echelon and supply chain costs. We show that the cost impact is higher as more decision makers enter a supply chain. Managerial implications: The cost of behavioral ordering is not consistent across the supply chain. Managers can use the estimation/simulation framework to analyze the impact of human behavior in their supply chains and evaluate improvement efforts such as coordination or information sharing. Our results show that behavioral ordering by a retailer has an out-sized impact on supply chain costs, which suggests that upstream echelons are better placed to make forecasting and replenishment decisions.

scholarly journals Centralized and Decentralized Warehouse Logistics Collaboration

2020 ◽  
Vol 22 (4) ◽  
pp. 812-831 ◽  
Author(s):  
Shiman Ding ◽  
Philip M. Kaminsky
Keyword(s):  
Lower Bound ◽  
Transportation Cost ◽  
Problem Definition ◽  
Cost Ratio ◽  
Computational Studies ◽  
Practical Relevance ◽  
Grocery Industry ◽  
Ordering Policy ◽  
Managerial Implications ◽  
The Cost

Problem definition: We bound the value of collaboration in a decentralized multisupplier multiretailer setting, where several suppliers ship to several retailers through a shared warehouse, and outbound trucks from the warehouse contain the products of multiple suppliers. Academic/practical relevance: In an emerging trend in the grocery industry, multiple suppliers and retailers share a warehouse to facilitate horizontal collaboration, lower transportation costs, and increase delivery frequencies. Thus far, these so-called mixing and consolidation centers are operated in a decentralized manner, with little effort to coordinate shipments from multiple suppliers with shipments to multiple retailers. Facilitating collaboration in this setting would be challenging (both technically and in terms of the level of trust that would be necessary), so it is useful to understand the potential gains of collaboration. Methodology: We extend the classic one-warehouse multiretailer analysis to incorporate multiple suppliers and per-truck outbound transportation cost from the warehouse and develop a cost lower bound on centralized operation as benchmark. We then analyze decentralized versions of the system, in which each retailer and each supplier maximizes his or her own utility in a variety of settings, and we analytically bound the ratio of the cost of decentralized to centralized operation to bound the loss resulting from decentralization. Results: We find analytical bounds on the performance of several decentralized policies. The best, a decentralized zero-inventory ordering policy, has a cost ratio when compared with a lower bound on the centralized policy of no more than 3/2. In computational studies, we find that costs of decentralized policies are even closer to those of centralized policies. Managerial implications: Easy-to-implement decentralized policies are efficient and effective in this setting, suggesting that centralization (and thus a potentially complex and expensive coordination effort) is unlikely to result in significant benefits.

scholarly journals Theoretical Analysis and Design of an Innovative Coil Structure for Transcranial Magnetic Stimulation

2021 ◽  
Vol 11 (4) ◽  
pp. 1960
Author(s):  
Naming Zhang ◽  
Ziang Wang ◽  
Jinhua Shi ◽  
Shuya Ning ◽  
Yukuo Zhang ◽  
...  
Keyword(s):  
Electromagnetic Field ◽  
Transcranial Magnetic Stimulation ◽  
Theoretical Analysis ◽  
Numerical Simulations ◽  
Magnetic Stimulation ◽  
Influential Factors ◽  
Intersection Angle ◽  
Electromagnetic Field Distribution ◽  
Analysis And Design ◽  
Coil Structure

Previous research showed that pulsed functional magnetic stimulation can activate brain tissue with optimum intensity and frequency. Conventional stimulation coils are always set as a figure-8 type or Helmholtz. However, the magnetic fields generated by these coils are uniform around the target, and their magnetic stimulation performance still needs improvement. In this paper, a novel type of stimulation coil is proposed to shrink the irritative zone and strengthen the stimulation intensity. Furthermore, the electromagnetic field distribution is calculated and measured. Based on numerical simulations, the proposed coil is compared to traditional coil types. Moreover, the influential factors, such as the diameter and the intersection angle, are also analyzed. It was demonstrated that the proposed coil has a better performance in comparison with the figure-8 coil. Thus, this work suggests a new way to design stimulation coils for transcranial magnetic stimulation.

Mathematical Model Establishment and Analysis on the Pipe Deformation under External Pressure with the Ovality

2013 ◽  
Vol 760-762 ◽  
pp. 2263-2266
Author(s):  
Kang Yong ◽  
Wei Chen
Keyword(s):  
Mathematical Model ◽  
Theoretical Analysis ◽  
Yield Strength ◽  
Residual Stresses ◽  
Numerical Simulations ◽  
Significant Influence ◽  
External Pressure ◽  
Pipe Diameter ◽  
Axial Loads ◽  
The Stability

Beside the residual stresses and axial loads, other factors of pipe like ovality, moment could also bring a significant influence on pipe deformation under external pressure. The Standard of API-5C3 has discussed the influences of deformation caused by yield strength of pipe, pipe diameter and pipe thickness, but the factor of ovality degree is not included. Experiments and numerical simulations show that with the increasing of pipe ovality degree, the anti-deformation capability under external pressure will become lower, and ovality affecting the stability of pipe shape under external pressure is significant. So it could be a path to find out the mechanics relationship between ovality and pipe deformation under external pressure by the methods of numerical simulations and theoretical analysis.

Partial Completion as a Nonprofit Strategy

2021 ◽  
Author(s):  
Can Zhang ◽  
Atalay Atasu ◽  
Karthik Ramachandran
Keyword(s):  
Nonprofit Organizations ◽  
Service Provision ◽  
Problem Definition ◽  
Product Service ◽  
Service Portfolio ◽  
Wide Range ◽  
Partial Completion ◽  
Innovative Solution ◽  
Managerial Implications ◽  
Level 3

Problem definition: Faced with the challenge of serving beneficiaries with heterogeneous needs and under budget constraints, some nonprofit organizations (NPOs) have adopted an innovative solution: providing partially complete products or services to beneficiaries. We seek to understand what drives an NPO’s choice of partial completion as a design strategy and how it interacts with the level of variety offered in the NPO’s product or service portfolio. Academic/practical relevance: Although partial product or service provision has been observed in the nonprofit operations, there is limited understanding of when it is an appropriate strategy—a void that we seek to fill in this paper. Methodology: We synthesize the practices of two NPOs operating in different contexts to develop a stylized analytical model to study an NPO’s product/service completion and variety choices. Results: We identify when and to what extent partial completion is optimal for an NPO. We also characterize a budget allocation structure for an NPO between product/service variety and completion. Our analysis sheds light on how beneficiary characteristics (e.g., heterogeneity of their needs, capability to self-complete) and NPO objectives (e.g., total-benefit maximization versus fairness) affect the optimal levels of variety and completion. Managerial implications: We provide three key observations. (1) Partial completion is not a compromise solution to budget limitations but can be an optimal strategy for NPOs under a wide range of circumstances, even in the presence of ample resources. (2) Partial provision is particularly valuable when beneficiary needs are highly heterogeneous, or beneficiaries have high self-completion capabilities. A higher self-completion capability generally implies a lower optimal completion level; however, it may lead to either a higher or a lower optimal variety level. (3) Although providing incomplete products may appear to burden beneficiaries, a lower completion level can be optimal when fairness is factored into an NPO’s objective or when beneficiary capabilities are more heterogeneous.

The Effects of Patent Extension and Take-Back Regulation on Green Pharmacy

2021 ◽  
Author(s):  
Tianqin Shi ◽  
Nicholas C. Petruzzi ◽  
Dilip Chhajed
Keyword(s):  
Pharmaceutical Industry ◽  
Social Welfare ◽  
Technical Information ◽  
Problem Definition ◽  
Theoretic Model ◽  
Innovative Company ◽  
Take Back ◽  
Starting Point ◽  
European Environmental Agency ◽  
Managerial Implications

Problem definition: The eco-toxicity arising from unused pharmaceuticals has regulators advocating the benign design concept of “green pharmacy,” but high research and development expenses can be prohibitive. We therefore examine the impacts of two regulatory mechanisms, patent extension and take-back regulation, on inducing drug manufacturers to go green. Academic/practical relevance: One incentive suggested by the European Environmental Agency is a patent extension for a company that redesigns its already patented pharmaceutical to be more environmentally friendly. This incentive can encourage both the development of degradable drugs and the disclosure of technical information. Yet, it is unclear how effective the extension would be in inducing green pharmacy and in maximizing social welfare. Methodology: We develop a game-theoretic model in which an innovative company collects monopoly profits for a patented pharmaceutical but faces competition from a generic rival after the patent expires. A social-welfare-maximizing regulator is the Stackelberg leader. The regulator leads by offering a patent extension to the innovative company while also imposing take-back regulation on the pharmaceutical industry. Then the two-profit maximizing companies respond by setting drug prices and choosing whether to invest in green pharmacy. Results: The regulator’s optimal patent extension offer can induce green pharmacy but only if the offer exceeds a threshold length that depends on the degree of product differentiation present in the pharmaceutical industry. The regulator’s correspondingly optimal take-back regulation generally prescribes a required collection rate that decreases as its optimal patent extension offer increases, and vice versa. Managerial implications: By isolating green pharmacy as a potential target to address pharmaceutical eco-toxicity at its source, the regulatory policy that we consider, which combines the incentive inherent in earning a patent extension on the one hand with the penalty inherent in complying with take-back regulation on the other hand, serves as a useful starting point for policymakers to optimally balance economic welfare considerations with environmental stewardship considerations.

Influence of inter-organizational relations on methods of calculating the cost of production of agricultural organizations

2020 ◽  
pp. 13-20 ◽  
Author(s):  
Anastasiya Alekseevna Romanova
Keyword(s):  
Theoretical Analysis ◽  
Cost Calculation ◽  
Interorganizational Cooperation ◽  
Organizational Relations ◽  
Interorganizational Management ◽  
Calculation System ◽  
Analytical System ◽  
Definition Of ◽  
The Cost ◽  
Organizational Cooperation

The author’s definition of inter-organizational cooperation, interorganizational management accounting and inter-organizational accounting and analytical system and cost calculation system in the framework of inter-organizational relations is given in the article on the basis of theoretical analysis. The features of calculating the cost of interorganizational cooperation are defined, new accounting practices are described, the advantages of implementing this type of accounting are identified, and possible problem areas are identified.

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