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.

Shipping Consolidation Across Two Warehouses with Delivery Deadline and Expedited Options for E-commerce and Omni-channel Retailers

2020 ◽  
Author(s):  
Lai Wei ◽  
Roman Kapuscinski ◽  
Stefanus Jasin
Keyword(s):  
Economies Of Scale ◽  
Optimal Solution ◽  
Problem Definition ◽  
Shipment Consolidation ◽  
On Demand ◽  
Numerical Tests ◽  
Optimal Policies ◽  
Shipping Costs ◽  
Multiple Orders ◽  
Managerial Implications

Problem definition: Shipment consolidation (i.e., shipping multiple orders together instead of shipping them separately) is commonly used to decrease total shipping costs. However, when the delivery of some orders is delayed, so they can be consolidated with future orders, a more expensive expedited shipment may be needed to meet shorter deadlines. In this paper, we study the optimal consolidation policy focusing on the trade-off between economies of scale due to combining orders and expedited shipping costs, in the setting of two warehouses. Academic/practical relevance: Our work is motivated by the application of fulfillment consolidation in e-commerce and omni-channel retail, especially with the rise of so-called on-demand logistics services. Sellers have the flexibility to take advantage of consolidation by deciding when to ship the orders and from which warehouse to fulfill the orders, as long as the orders’ deadlines are met. Methodology: We use Dynamic Programming to study the optimal policy and its structure. We also conduct extensive simulation tests to evaluate the performance of heuristics that are based on structures of the optimal policies. Results: The optimal policies and their structures are characterized. Using the insights of these structural properties, we propose two easily implementable heuristics that perform within 1%–2% of the optimal solution and outperform other benchmark consolidation methods in numerical tests. Managerial implications: Consolidation is shown to significantly reduce the outbound shipping costs. Retailers can take advantage of it to effectively improve the standard policies by simply applying the threshold-form heuristics we propose.

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.

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.

scholarly journals Investigating the Sustainability Performance of PPP-Type Infrastructure Projects: A Case of China

2018 ◽  
Vol 10 (11) ◽  
pp. 4162 ◽  
Author(s):  
Shengqin Zheng ◽  
Ke Xu ◽  
Qing He ◽  
Shaoze Fang ◽  
Lin Zhang
Keyword(s):  
Sustainable Development ◽  
Local Governments ◽  
Large Scale ◽  
Behavioral Control ◽  
Equation Model ◽  
Perceived Behavioral Control ◽  
Actual Behavior ◽  
Infrastructure Projects ◽  
Positive Effects ◽  
Managerial Implications

In China, the demand for public infrastructure projects is high due to the acceleration of urbanization and the rapid growth of the economy in recent years. Infrastructures are mainly large scale, so local governments have difficulty in independently completing financing work. In this context, public sectors often seek cooperation from private sectors, in which public–private partnership (PPP) is increasingly common. Although numerous studies have concentrated on sustainable development, the unsustainability performances of infrastructures are often reported on various media. Furthermore, studies on the sustainability performances of PPP-type infrastructure (PTI) projects are few from the perspective of private sectors’ behaviors. In this study, we adopted the modified theory of planned behavior and the structure equation model and conducted a questionnaire survey with 258 respondents for analyzing the sustainable behaviors of private sectors. Results indicated that behavioral attitude, perceived behavioral control, and subjective norm interact significantly. They have direct positive effects on behavioral intention and then indirectly influence actual behavior through this intention. Actual sustainable behaviors of private sectors have significantly positive effects on the sustainable development of cities. We offer theoretical and managerial implications for public and private sectors on the basis of the findings to ensure and promote the sustainability performances of PTI projects.

Truthful Mechanisms for Medical Surplus Product Allocation

2020 ◽  
Vol 22 (4) ◽  
pp. 735-753 ◽  
Author(s):  
Can Zhang ◽  
Atalay Atasu ◽  
Turgay Ayer ◽  
L. Beril Toktay
Keyword(s):  
Private Information ◽  
Value Added ◽  
Information Provision ◽  
Problem Definition ◽  
Preference Ranking ◽  
Additional Increase ◽  
Healthcare Facilities ◽  
Selection Decisions ◽  
Managerial Implications ◽  
Recipient Selection

Problem definition: We analyze a resource allocation problem faced by medical surplus recovery organizations (MSROs) that recover medical surplus products to fulfill the needs of underserved healthcare facilities in developing countries. The objective of this study is to identify implementable strategies to support recipient selection decisions to improve MSROs’ value provision capability. Academic/practical relevance: MSRO supply chains face several challenges that differ from those in traditional for-profit settings, and there is a lack of both academic and practical understanding of how to better match supply with demand in this setting where recipient needs are typically private information. Methodology: We propose a mechanism design approach to determine which recipient to serve at each shipping opportunity based on recipients’ reported preference rankings of different products. Results: We find that when MSRO inventory information is shared with recipients, the only truthful mechanism is random selection among recipients, which defeats the purpose of eliciting information. Subsequently, we show that (1) eliminating inventory information provision enlarges the set of truthful mechanisms, thereby increasing the total value provision; and (2) further withholding information regarding other recipients leads to an additional increase in total value provision. Finally, we show that under a class of implementable mechanisms, eliciting recipient valuations has no value added beyond eliciting preference rankings. Managerial implications: (1) MSROs with large recipient bases and low inventory levels can significantly improve their value provision by appropriately determining the recipients to serve through a simple scoring mechanism; (2) to truthfully elicit recipient needs information to support the recipient selection decisions, MSROs should withhold inventory and recipient-base information; and (3) under a set of easy-to-implement scoring mechanisms, it is sufficient for MSROs to elicit recipients’ preference ranking information. Our findings have already led to a change in the practice of an award-winning MSRO.

scholarly journals The Effects of Leisure Life Satisfaction on Subjective Wellbeing under the COVID-19 Pandemic: The Mediating Role of Stress Relief

2021 ◽  
Vol 13 (23) ◽  
pp. 13225
Author(s):  
Grace B. Yu ◽  
Najung Kim
Keyword(s):  
Life Satisfaction ◽  
Large Scale ◽  
Subjective Wellbeing ◽  
Positive Impact ◽  
Stress Relief ◽  
Social Survey ◽  
Mediating Role ◽  
Perceived Seriousness ◽  
Managerial Implications

Under the continuous spread of COVID-19 infection, individuals are finding their own ways to manage their stress and subjective wellbeing. The main objective of this research is to test the role of leisure life satisfaction on one’s subjective wellbeing in the era of COVID-19 as mediated by stress relief. Individuals’ satisfaction with leisure life is hypothesized to both directly and indirectly affect their subjective wellbeing as mediated by relieved stress. The positive impact of stress relief on one’s subjective wellbeing is hypothesized to be moderated by the perceived seriousness of the COVID-19 pandemic. Data from a large-scale social survey in South Korea (N = 40,085) were used to test the hypotheses and the results confirmed them. Theoretical and managerial implications that stress the importance of the strategic management of one’s leisure life are discussed.

scholarly journals PRINCIPLES OF COASTAL AREA & WATERSHED MANAGEMENT (Review: Strategic Plan for Integrated Coastal Management of Lampung)

2018 ◽  
Author(s):  
Riki Rahmad
Keyword(s):  
Coastal Zone ◽  
Coastal Management ◽  
Large Scale ◽  
Coastal Zone Management ◽  
Problem Definition ◽  
Infrastructure Development ◽  
Coastal Zones ◽  
Integrated Coastal Management ◽  
Environmentally Sustainable ◽  
Zone Management

At the World Bank, coastal zone management (CZM) is a part of Integrated Coastal Management (ICM), is an interdisciplinary roomates and Intersectoral approach to problem definition and solutions in the coastal zone, it includes a range of initiatives that promote the environmentally sustainable development of coastal areas, and encompasses a range of activities such as community-based management of coastal resources, large-scale infrastructure development (ports, industrial and residential parks, etc..), pollution and erosion control, aquaculture, tourism and recreation, oil spill contingency planning, and navigational risk assessment.CZM is a process of governance that consists of the legal andinstitutional framework Necessary to Ensure that development and management plans for coastal zones are integrated with environmental and social goals, and are developed with the participation of those affected.The purpose of the ICM is to maximize the benefits providedby the coastal zone and to minimize the conflicts and Harmful effects of activities on social, cultural and environmental resources.

Managing Congestion in Matching Markets

2021 ◽  
Author(s):  
Nick Arnosti ◽  
Ramesh Johari ◽  
Yash Kanoria
Keyword(s):  
Problem Definition ◽  
Theoretic Model ◽  
Matching Markets ◽  
Contact Potential ◽  
Managerial Implications ◽  
The Commons ◽  
Game Theoretic ◽  
Face Search ◽  
Uniqueness Of Equilibrium ◽  
Never Screened

Problem definition: Participants in matching markets face search and screening costs when seeking a match. We study how platform design can reduce the effort required to find a suitable partner. Practical/academic relevance: The success of matching platforms requires designs that minimize search effort and facilitate efficient market clearing. Methodology: We study a game-theoretic model in which “applicants” and “employers” pay costs to search and screen. An important feature of our model is that both sides may waste effort: Some applications are never screened, and employers screen applicants who may have already matched. We prove existence and uniqueness of equilibrium and characterize welfare for participants on both sides of the market. Results: We identify that the market operates in one of two regimes: It is either screening-limited or application-limited. In screening-limited markets, employer welfare is low, and some employers choose not to participate. This occurs when application costs are low and there are enough employers that most applicants match, implying that many screened applicants are unavailable. In application-limited markets, applicants face a “tragedy of the commons” and send many applications that are never read. The resulting inefficiency is worst when there is a shortage of employers. We show that simple interventions—such as limiting the number of applications that an individual can send, making it more costly to apply, or setting an appropriate market-wide wage—can significantly improve the welfare of agents on one or both sides of the market. Managerial implications: Our results suggest that platforms cannot focus exclusively on attracting participants and making it easy to contact potential match partners. A good user experience requires that participants not waste effort considering possibilities that are unlikely to be available. The operational interventions we study alleviate congestion by ensuring that potential match partners are likely to be available.

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