Hamed Mamani

Supply Chain Coordination and Influenza Vaccination

Annual influenza outbreaks incur great expenses in both human and monetary terms, and billions of dollars are being allocated for influenza pandemic preparedness in an attempt to avert even greater potential losses. Vaccination is a primary weapon for fighting influenza outbreaks. The influenza vaccine supply chain has characteristics that resemble the newsvendor problem but possesses several characteristics that distinguish it from many other supply chains. Differences include a nonlinear value of sales (caused by the nonlinear health benefits of vaccination that are due to infection dynamics) and vaccine production yield issues. We show that production risks, taken currently by the vaccine manufacturer, lead to an insufficient supply of vaccine. Several supply contracts that coordinate buyer (governmental public health service) and supplier (vaccine manufacturer) incentives in many other industrial supply chains cannot fully coordinate the influenza vaccine supply chain. We design a variant of the cost-sharing contract and show that it provides incentives to both parties so that the supply chain achieves global optimization and hence improves the supply of vaccines.

Operational issues and network effects in vaccine markets

Abstract One of the most important concerns for managing public health is the prevention of infectious diseases. Although vaccines provide the most effective means for preventing infectious diseases, there are two main reasons why it is often difficult to reach a socially optimal level of vaccine coverage: (i) the emergence of operational issues (such as yield uncertainty) on the supply side, and (ii) the existence of negative network effects on the consumption side. In particular, uncertainties about production yield and vaccine imperfections often make manufacturing some vaccines a risky process and may lead the manufacturer to produce below the socially optimal level. At the same time, negative network effects provide incentives to potential consumers to free ride off the immunity of the vaccinated population. In this research, we consider how a central policy-maker can induce a socially optimal vaccine coverage through the use of incentives to both consumers and the vaccine manufacturer. We consider a monopoly market for an imperfect vaccine; we show that a fixed two-part subsidy is unable to coordinate the market, but derive a two-part menu of subsidies that leads to a socially efficient level of coverage.

Vaccine market coordination using subsidy

Prevention of infectious diseases is an important concern for managing public health. Although vaccines are the most effective means for preventing infectious diseases, the existence of a negative network externality often makes it difficult for vaccine coverage to reach a level that is socially optimal. In this research, we consider how a subsidy program can induce a socially optimal vaccine coverage. We consider an oligopoly market with identical vaccine producers and derive a subsidy that leads to a socially efficient level of coverage. We also derive a tax-subsidy combination that is revenue neutral, but achieves the same effect. Overall, our results provide useful insights for governments and policy makers with respect to an important issue related to public health.

Coping with gray markets: : The impact of market conditions and product characteristics

Gray markets, also known as parallel imports, are marketplaces for trading genuine products that are diverted from authorized distribution channels. They have created fierce competition for manufacturers in many industries and each year billions of dollars worth of products are traded in these markets. Using a game-theoretic model, we analyze the impact of parallel importation on a price-setting manufacturer that serves two markets with uncertain demand. We characterize the optimal joint price and quantity decisions of the manufacturer which determine whether the manufacturer should ignore, block, or allow parallel importation. We also show that parallel importation forces the manufacturer to reduce her price gap while demand uncertainty forces her to lower prices in both markets. Moreover, we observe that parallel importation may force the manufacturer to exit the low-profit market. Through extensive numerical experiments, we explore the impact of market conditions (size and price elasticity) and product characteristics (a fashion item or a commodity) on the manufacturers reaction to parallel importation. In addition, we provide interesting insights about the value of strategic pricing for coping with gray markets versus the uniform pricing policy that has been adopted by some companies to eliminate gray markets.

A Game-Theoretic Model of International Influenza Vaccination Coordination

Influenza vaccination decisions in one country can influence the size of an outbreak in other countries due to interdependent risks from infectious disease transmission. This paper examines the inefficiency in the allocation of influenza vaccines that is due to interdependent risk of infection across borders and proposes a contractual mechanism to reduce such inefficiencies. The proposed contract is based on an epidemic model that accounts for intranational transmission and that from a source country where the dominant strain emerges. The contract reduces the overall financial burden of infection globally and improves the total number infected by seasonal influenza outbreaks. This is consistent with recent recommendations to improve pandemic preparedness. Numerical experiments demonstrate that the benefits of the contract can prevent millions of influenza cases and save tens of millions of dollars, and that the benefits are even greater when cross-border transmission is higher, even if cross-border transmission parameters have moderate estimation errors. This paper was accepted by Martin Lariviere, operations management.

Bundled Payment vs. Fee-for-Service: Impact of Payment Scheme on Performance

Healthcare reimbursements in the United States have been traditionally based on a fee-for-service FFS scheme, providing incentives for high volume of care, rather than efficient care. The new healthcare legislation tests new payment models that remove such incentives, such as the bundled payment BP system. We consider a population of patients beneficiaries. The provider may reject patients based on the patients cost profile and selects the treatment intensity based on a risk-averse utility function. Treatment may result in success or failure, where failure means that unforeseen complications require further care. Our interest is in analyzing the effect of different payment schemes on outcomes such as the presence and extent of patient selection, the treatment intensity, the providers utility and financial risk, and the total system payoff. Our results confirm that FFS provides incentives for excessive treatment intensity and results in suboptimal system payoff. We show that BP could lead to suboptimal patient selection and treatment levels that may be lower or higher than desirable for the system, with a high level of financial risk for the provider. We also find that the performance of BP is extremely sensitive to the bundled payment value and to the providers risk aversion. The performance of both BP and FFS degrades when the provider becomes more risk averse. We design two payment systems, hybrid payment and stop-loss mechanisms, that alleviate the shortcomings of FFS and BP and may induce system optimum decisions in a complementary manner. This paper was accepted by Serguei Netessine, operations management.

Closed-Form Solutions for Robust Inventory Management

We propose and analyze robust optimization models of an inventory management problem, where cumulative purchase, inventory, and shortage costs over n periods are minimized for correlated nonidentically distributed demand. We assume that the means and covariance matrix of stochastic demand are known; the distributions are not needed. We derive closed-form ordering quantities for both symmetric and asymmetric uncertainty sets, under capacitated inventory constraints, in both static and dynamic settings. The behaviors of our robust strategies differ qualitatively depending on the symmetry of the uncertainty set. For instance, considering our simplest static problem, (1) if the uncertainty set is symmetric, then there is positive ordering in all periods, whereas (2) if the set is asymmetric, then there is a set of periods in the middle of the planning horizon with zero orders. We also link the symmetry of the uncertainty set to the symmetry of the demand distribution. Finally, we present encouraging computati...

Optimal Launch Vehicle Size Determination for Moon-Mars Transportation Architectures

NASA’s human Lunar and Mars exploration (HLE/HME) program requires a sustainable and affordable transportation system between Earth and Moon/Mars. A crucial element of this system is the launch vehicle. Much debate has centered on the trade between expendable launch vehicles and heavy-lifters; however, arguments to date have been largely qualitative or limited in scope. This paper provides a quantitative enumeration of the launch vehicle trade space (in terms of both cost and risk), based on a generalizable process for generating launch manifests from transportation architectures (sets of vehicles for carrying out Lunar/Mars missions). For the baseline HLE/HME architecture considered here, an optimal launch vehicle size is found at approximately 82 metric tons; a 28-mt EELV emerges as another good option. The results show optimal launch vehicle selection is highly dependent on the transportation architecture. Therefore, launch vehicle selection should be considered an integral part of the design of the Moon/Mars exploration transportation system.

An Analysis of Price vs. Revenue Protection: Government Subsidies in the Agriculture Industry

The agriculture industry plays a critical role in the U.S. economy, and various industry sectors depend on the output of farms. To protect and raise farmers’ income, the U.S. government offers two subsidy programs to farmers: the Price Loss Coverage (PLC) program, which pays farmers a subsidy when the market price falls below a reference price, and the Agriculture Risk Coverage (ARC) program, which is triggered when farmers’ revenue is below a threshold. Given the unique features of PLC and ARC, we develop models to analyze their impacts on consumers, farmers, and the government. Our analysis generates several insights. First, while PLC always motivates farmers to plant more acres compared to the no-subsidy case, farmers may plant fewer acres under ARC, leading to a lower crop supply. Second, despite the prevailing intuition that ARC generally dominates PLC, we show that both farmers and consumers may be better off under PLC for a large range of parameter values, even when the reference price represents t...