Michael R. Galbreth

Social Sharing of Information Goods: Implications for Pricing and Profits

Social sharing of information goods---wherein a single good is purchased and shared through a network of acquaintances such as friends or coworkers---is a significant concern for the providers of these goods. The effect of social sharing on firm pricing and profits depends critically on two elements: the structure of the underlying consumer network and the mechanism used by groups to decide whether to purchase at a given price. We examine the effect of social sharing under different network structures (decentralized, centralized, and complete), which reflect a range of market conditions. Moreover, we draw from the mechanism design literature to examine several approaches to group decision making. Our results suggest that a firm can benefit from increased social sharing if the level of sharing is already high, enabling a pricing strategy targeted primarily at sharing groups rather than individuals. However, the point at which sharing becomes marginally beneficial for a firm depends on both the distribution of group sizes (which derives from the network structure) and the group decision mechanism. Additional insights are obtained when we extend the model to capture homophily in group formation and the potential that a subset of consumers will never share for ethical reasons.

The impact of malicious agents on the enterprise software industry

In this paper, a competitive software market that includes horizontal and quality differentiation, as well as a negative network effect driven by the presence of malicious agents, is modeled. Software products with larger installed bases, and therefore more potential computers to attack, present more appealing targets for malicious agents. One finding is that software firms may profit from increased malicious activity. Software products in a more competitive market are less likely to invest in security, while monopolistic or niche products are likely to be more secure from malicious attack. The results provide insights for IS managers considering enterprise software adoption.

A heuristic for single-warehouse multiretailer supply chains with all-unit transportation cost discounts

Abstract In supply chain management research, transportation costs, if explicitly considered at all, are frequently assumed to be linear. These costs often have a more complex form, such as an all-unit discount structure – this piecewise cost function adds significant complexity when included in supply chain management problems and is therefore often ignored due to solution time or tractability concerns. We present and evaluate a new heuristic procedure which provides good solutions to problems involving all-unit discount cost functions while significantly reducing solution times. The general nature of this procedure does not require assumptions about the supply chain structure or policies, and is therefore applicable in a wide range of settings.

Competition and Sustainability: The Impact of Consumer Awareness

Sustainability, a broad concept that includes numerous environmental and social dimensions, has emerged as an important product evaluation criterion for consumers. We suggest the impact of sustainability on consumer behavior depends on two factors—each individual consumers unique level of concern about sustainability, and the general level of awareness regarding the sustainability of competing products—that together determine the level of heterogeneity among consumer attitudes toward sustainability. We incorporate sustainability concern and awareness into a model of horizontal competition in a duopoly, where one firms product is more sustainable than the others. Our results suggest that marginal increases in awareness can benefit all firms, including the less sustainable one, when awareness is sufficiently high (the explicit goal of recent sustainability labeling initiatives). In several model extensions, we provide additional insights for the following cases: the sustainable firm controls the extent of its sustainability advantage, the sustainable firm can directly influence the general level of awareness, and the distribution of sustainability concern across consumers is nonuniform. Our results enable us to suggest several new insights for managers, both those whose products enjoy a sustainability advantage and those whose products do not.

Offshore Remanufacturing with Variable Used Product Condition

We consider the acquisition and production decisions of a remanufacturer who acquires used products of variable condition and allocates remanufacturing activity to domestic and offshore facilities. The problem is formulated as a multicommodity network flow model with economies of scale and product obsolescence. We show that the remanufacturers optimal strategy can be chosen from a finite set of simple policies in which each product is routed to a facility based on its condition. We then numerically investigate the impact of key parameters on optimal decisions regarding offshore remanufacturing.

Implementing Large-Scale Optimization Models in Excel Using VBA

We discuss the importance of spreadsheets for optimization modeling, including a description of their limitations for large-scale problems. We then describe efficient ways to overcome these limits. Our approach makes use of Excels standard functionality but augments Excel with its programming language, Visual Basic for Applications (VBA), where necessary. We show how using VBA within Excel to generate and solve large linear programs (LPs) overcomes many of the problems inherent in purely spreadsheet-based models and greatly increases model usability. The techniques described were instrumental in our successful development of a large-scale procurement/distribution LP that resulted in savings of approximately

Designing large-scale supply chain linear programs in spreadsheets

1,000,000 in the first year, with even greater annual savings expected in the future.

The Impact of Consumer Attentiveness and Search Costs on Firm Quality Disclosure: A Competitive Analysis

Developing techniques to create a complete supply chain model across an entire product line.

How collaborative forecasting can reduce forecast accuracy

Firms can invest to disclose quality information about their products to consumers, but consumers are not always perfectly attentive to these disclosures. Indeed, technologies such as digital video recorders have increased the ease with which disclosures can be avoided by consumers. Although such inattention may result in a consumer missing information from one or more competing firms, consumers who have missed disclosures might decide to search for quality information to become fully informed before making a purchase decision. In this paper we incorporate consumer attentiveness, as well as the related endogenous search decision, into a model of quality disclosure. Our results suggest that firms should disclose less quality information as the share of partially informed consumers (informed about one firm but not the other) increases, or as consumer search costs increase. We also provide insights into the potential impact of consumer trends toward lower attentiveness and lower search costs. This paper was accepted by J. Miguel Villas-Boas, marketing.

The Competitive Impact of Targeted Television Advertisements Using DVR Technology

Abstract In this paper, we provide an analytical perspective on the link between supply chain collaboration and forecast accuracy, showing that collaborative forecasting can lead to less accurate demand forecasts over a wide range of cost and demand parameters. The result is explained by the decision maker’s relative preference for investing in forecasting vs. order quantities to manage demand uncertainty.