Hemant K. Bhargava

Scheduling a Major College Basketball Conference

The nine universities in the Atlantic Coast Conference (ACC) have a basketball competition in which each school plays home and away games against each other over a nine-week period. The creation of a suitable schedule is a very difficult problem with a myriad of conflicting requirements and preferences. We develop an approach to scheduling problems that uses a combination of integer programming and enumerative techniques. Our approach yields reasonable schedules very quickly and gave a schedule that was accepted by the ACC for play in 1997–1998.

Progress in Web-based decision support technologies

World Wide Web technologies have transformed the design, development, implementation and deployment of decision support systems. This article reviews and summarizes recent technology developments, current usage of Web-based DSS, and trends in the deployment of such systems. Many firms use the Web as a medium to convey information about DSS products or to distribute DSS software. The use of Web-based computation to provide product demonstrations or to deploy DSS applications for remote access remains less common. The academic literature on Web-based DSS is largely focused on applications and implementations, and only a few articles examine architectural issues or provide design guidelines based on empirical evidence.

Information Goods and Vertical Differentiation

Second-degree price discrimination, that is, vertical differentiation, is widely practiced by firms selling physical goods to consumers with heterogeneous valuations. This strategy leads to market segmentation and has been shown to be optimal by many researchers. On the other hand, researchers have also demonstrated, under certain restrictive conditions, that vertical differentiation may not be optimal for information goods. We analyze vertical differentiation for a monopolist, continuing the practice of modeling consumer valuation as a linear function of product quality and consumer type but generalizing assumptions about marginal costs and consumer distributions. We show that the firms optimal product line depends on the benefit-to-cost ratio of qualities in the choice vector. We find that a vertical differentiation strategy is not optimal when the highest quality product has the best benefitto-cost ratio. Many information goods satisfy this property.

Decision support on demand : Emerging electronic markets for decision technologies

Abstract For the individual or organization wishing to employ a scientific approach in solving decision problems, there is a plethora of relevant concepts, methods, models, and software. Yet, relative to their potential or to peer software such as database technologies, decision technologies are little used in real-world decision making. We argue that at least some of the problems that restrict the use of decision technologies are rooted in the use of conventional market mechanisms to distribute them. We propose the development of electronic markets for decision technologies, and explain how features of modem information networks offer a solution to these problems. We present a framework for comparing alternative electronic markets for decision technologies, survey and analyze several such emerging markets, and present some details on our own research initiative — DecisionNet. A distinctive feature of DecisionNet is that it consists of software agents that perform — at the market level —; functions (such as user accounting, billing and setting up the interface to a decision technology) that would otherwise need to be developed for each consumer, provider, or technology.

Research Note---When Is Versioning Optimal for Information Goods?

This paper provides insights about when versioning is an optimal strategy for information goods. Our characterization of this class of goods is that variable costs are invariant with quality, including the special case of zero variable costs. Our analysis assumes a monopoly firm that has an existing product in the market and has an opportunity to segment the market by introducing additional lower-quality versions. We derive a simple decision rule for determining the optimality of versioning based on the solution to a single-product maximization problem. Versioning is optimal when the optimal market share of the lower-quality version, offered alone, is greater than the optimal market share of the high-quality version, offered alone. A firm can profitably employ versioning for an information good if it can design the lower quality in a way that, relative to their valuations for the high-end version, high-type consumers have a lower relative valuation for the lower quality than do low-type consumers. When variable costs increase, a firm that offered only one product version need not consider adding another version. When variable costs decrease, the firm should explore adding a lower-quality version.

MMM: a Web-based system for sharing statistical computing modules

This prototype method management system (MMM), implemented with Web technologies, supports distributed authoring and execution of computational software modules among an interdisciplinary group of developers and users. Heterogeneous data formats, programming languages, and computing platforms pose various challenges whenever researchers are sharing and combining software modules, especially when the collaboration occurs across different traditions of scientific computing. To meet these challenges, we designed and implemented MMM. MMM is a collection of middleware services to support the interaction between software users and developers, and to facilitate the sharing of software modules across heterogeneous networks. The system design follows the World Wide Web paradigm: developers (providers) install their modules on the network in a way that allows users (consumers) to access and execute them. A prototype is available on the Web.

Unique Names Violations, a Problem for Model Integration or You Say Tomato, I Say Tomahto

The tomato-tomahto problem (known as the synonymy problem in the database literature) arises in the context of model management when different names are used in different models for what should be identical variables, and these different models are to be integrated or combined into a larger model. When this problem occurs, it is said that the unique names assumption has been violated. We propose a method by which violations of the unique names assumption can be automatically detected. The method relies on declaring four kinds of information and modeling variables: dimensional information, laws relating dimensional expressions, information (called the quiddity) about the intended interpretation of the variables, and laws relating quiddity expressions. We present and discuss the method and the principles and theory behind it, and we describe our (prototype) implementation of the method, as an additional function of an existing model management system. INFORMS Journal on Computing, ISSN 1091-9856, was publis...

Stockout Compensation: Joint Inventory and Price Optimization in Electronic Retailing

Delays in product availability are common in e-commerce where electronic retailers try to manage with very low inventories. While this lowers inventory costs, the negative effect of increased stockouts is to reduce net demand for the product. We analyze the effect of offering a lower price during stockout to compensate for a customers waiting time, using an EOQ-type inventory-modeling framework but solving simultaneously for both the optimal prices and the lengths of the in-stock and stockout periods. The lower price recaptures some lost demand and has an important synergistic effect: the increased sales rate leads to lower unit costs for inventory holding and product ordering. Stockout compensation improves market efficiency and increases the retailers sales and profit. The optimal stockout-compensation policy is to choose period lengths and prices such that the two periods have equal effective prices (i.e., the optimal stockout compensation equals the average waiting cost for a customer). Compared with the pure wait-free and stockless-operation policies, stockout compensation not only yields greater profits, but also greater revenues, lower unit costs, and increased consumer surplus and market coverage. Compared with a backorder policy without compensation, the stockout compensation policy improves profits and social welfare but at the expense of consumer surplus. Allowing for strategic consumer behavior under knowledge of future prices, the equal-effective-prices solution defines a rational-expectations equilibrium.

The World Wide Web: Opportunities for Operations Research and Management Science

The World Wide Web has already affected OR/MS work in a significant way, and holds great potential for changing the nature of OR/MS products and the OR/MS software economy. Web technologies are relevant to OR/MS work in two ways. First, the Web is a multimedia communication system. Originally based on an information pull model, it is-critically for OR/MS-being extended for information push as well. Second, it is a large distributed computing environment in which OR/MS products-interactive computational applications-can be made available, and interacted with, over a global network. Enabling technologies for Web-based execution of OR/MS applications are classified into those involving client-side execution and server-side execution. Methods for combining multiple client-side and server-side technologies are critical to OR/MSs use of these technologies. These methods, and various emerging technologies for developing computational applications, give the OR/MS worker a rich armament for building Web-based versions of conventional applications. They also enable a new class of distributed applications working on real-time data. Web technologies are expected to encourage the development of OR/MS products as specialized component applications that can be bundled to solve real-world problems. Effective exploitation, for OR/MS purposes, of these technological innovations will also require initiatives, changes, and greater involvement by OR/MS organizations.

Pricing and Product Design: Intermediary Strategies in an Electronic Market

Electronic intermediaries play an important role in many Web-based electronic markets, adding value for participants by offering such services as matchmaking and trust. This paper presents an economic model of intermediation where the intermediary offers services to two types of actors: consumers and providers. When consumers are heterogeneous, differentiated by their willingness to pay for intermediation, the intermediary can potentially offer two (or more) levels of service quality to target different consumer segments. The analysis in this paper highlights the aggregation benefit that consumers derive from having access to multiple providers through the intermediary. According to prior research on vertically differentiated digital goods, it is optimal to offer only one quality level in the market, because segmentation causes cannibalization and lowers profits. In the case of intermediation, however, the aggregation benefit makes it optimal for the intermediary to offer both levels of service. The intermediarys profits increase when the quality of the lower-quality service is decreased, suggesting that the two quality levels should be differentiated as much as possible. If the aggregation effect is intense, the intermediary should make the service free for providers.