Wenqiang Xiao

A multiprocessor task scheduling model for berth allocation: heuristic and worst-case analysis

We consider a scheduling problem in which the processors are arranged along a straight line, and each job requires simultaneous processing by multiple consecutive processors. We assume that the job sizes and processing times are agreeable. Our objective is to minimize the total weighted completion time of the jobs. This problem is motivated by the operation of berth allocation, which is to allocate vessels (jobs) to a berth with multiple quay cranes (processors), where a vessel may be processed by multiple consecutive cranes simultaneously. We develop a heuristic for the problem and perform worst-case analysis.

Incentives for Retailer Forecasting: Rebates vs. Returns

This paper studies a manufacturer that sells to a newsvendor retailer who can improve the quality of her demand information by exerting costly forecasting effort. In such a setting, contracts play two roles: providing incentives to influence the retailers forecasting decision and eliciting information obtained by forecasting to inform production decisions. We focus on two forms of contracts that are widely used in such settings and are mirror images of one another: a rebates contract, which compensates the retailer for the units she sells to end consumers, and a returns contract, which compensates the retailer for the units that are unsold. We characterize the optimal rebates contracts and returns contracts. Under rebates, the retailer, manufacturer, and total system may benefit from the retailer having inferior forecasting technology; this never occurs under returns. Although one might conjecture that returns would be inferior because its provision of “insurance” would discourage the retailer from forecasting, we show that returns are superior.

Revenue Management Through Dynamic Cross Selling in E-Commerce Retailing

This disclosure relates to a metering dispensing closure in which a pair of chambers are selectively placed in fluid communication with each other by an axially movable gravity actuated valve housed in one of the chambers. The valve includes a pair of diametrically opposite ports which are alternately in and out of registration with ports formed in the chamber housing the valve. When the closure is inverted a first of the chambers receives a predetermined quantity of a packaged product and upon reversion and subsequent inversion the predetermined quantity is transferred to a second of the chambers and dispensed through a port thereof to atmosphere.

Does a Manufacturer Benefit from Selling to a Better-Forecasting Retailer?

This paper considers a manufacturer selling to a newsvendor retailer that possesses superior demand-forecast information. We show that the manufacturers expected profit is convex in the retailers forecasting accuracy: The manufacturer benefits from selling to a better-forecasting retailer if and only if the retailer is already a good forecaster. If the retailer has poor forecasting capabilities, then the manufacturer is hurt as the retailers forecasting capability improves. More generally, the manufacturer tends to be hurt (benefit) by improved retailer forecasting capabilities if the product economics are lucrative (poor). Finally, the optimal procurement contract is a quantity discount contract.

Dynamic Lot Sizing with Batch Ordering and Truckload Discounts

This paper studies two important variants of the dynamic economic lot-sizing problem that are applicable to a wide range of real-world situations. In the first model, production in each time period is restricted to a multiple of a constant batch size, where backlogging is allowed and all cost parameters are time varying. Several properties of the optimal solution are discussed. Based on these properties, an efficient dynamic programming algorithm is developed. The efficiency of the dynamic program is further improved through the use of Monge matrices. Using the results developed for the first model, an O(n3log n) algorithm is developed to solve the second model, which has a general form of product acquisition cost structure, including a fixed charge for each acquisition, a variable unit production cost, and a freight cost with a truckload discount. This algorithm can also be used to solve a more general problem with concave cost functions.

The Impact of Royalty Contract Revision in a Multistage Strategic R&D Alliance

This paper investigates the impact of royalty revision on incentives and profits in a two-stage (research and development (R&D) stage and marketing stage) alliance with a marketer and an innovator. The marketer offers royalty contracts to the innovator. We find that the potential for royalty revision leads to more severe distortions in the optimal initial royalty contracts offered by the marketer. We show that if the innovator plays a significant role in the marketing stage, the marketer should offer a low royalty rate initially and then revise the royalty rate up later. Otherwise, she should do the opposite. We identify two major effects of royalty revision. First, royalty revision provides the marketer with a flexibility to dynamically adjust royalty rates across the two stages of the alliance to better align the innovators incentives. This incentive-realigning effect improves the marketers profit. Second, royalty revision makes it harder for the marketer to obtain private information from the innovator, because the innovator worries that the marketer will take advantage of the information to revise the initial contract to a more favorable one to herself later. This information-revealing effect hurts the marketers profit. We characterize in what kind of alliances marketers would benefit the most from royalty revision so that managers should clearly establish the expectation for royalty revision, and in what kind of alliances markerters would not benefit from royalty revision so that managers should commit not to revise the initial royalty contract. With royalty contracts that are contingent on the R&D outcome of the R&D stage, we find that contingent contract structure could be either substitutable (by fully capturing the incentive re-aligning effect) or complementary (by weakening the information revealing effect) to royalty revision, depending on whether the innovator plays a significant role in the marketing stage. Managers may need to use a contingent contract (if possible) either to replace or with royalty revision accordingly to improve profits. This paper was accepted by Kamalini Ramdas, entrepreneurship and innovation.

Dynamic lot size problems with one-way product substitution

Abstract We consider two multi-product dynamic lot size models with one-way substitution, where the products can be indexed such that a lower-index product may be used to substitute for the demand of a higher-index product. In the first model, the product used to meet the demand of another product must be physically transformed into the latter and incur a conversion cost. In the second model, a product can be directly used to satisfy the demand for another product without requiring any physical conversion. Both problems are generally computationally intractable. We develop dynamic programming algorithms that solve the problems in polynomial time when the number of products is fixed. A heuristic is also developed, and computational experiments are conducted to test the effectiveness of the heuristic and the efficiency of the optimal algorithm.

Subsidizing the Distribution Channel: Donor Funding to Improve the Availability of Malaria Drugs

In countries that bear the heaviest burden of malaria, most patients seek medicine for the disease in the private sector. Because the availability and affordability of recommended malaria drugs provided by the private-sector distribution channel is poor, donors (e.g., the Global Fund) are devoting substantial resources to fund subsidies that encourage the channel to improve access to these drugs. A key question for a donor is whether it should subsidize the purchases and/or the sales of the private-sector distribution channel. We show that the donor should only subsidize purchases and should not subsidize sales. We characterize the robustness of this result to four key assumptions: the products shelf life is long, the retailer has flexibility in setting the price, the retailer is the only level in the distribution channel, and retailers are homogeneous. This paper was accepted by Martin Lariviere, operations management .

Supply Chain Performance Under Market Valuation: An Operational Approach to Restore Efficiency

Based on a supply chain framework, we study the stocking decision of a downstream buyer who receives private demand information and has the incentive to influence her capital market valuation. We first characterize a market equilibrium under a general, single buyback contract. We show that the buyers stocking decision can be distorted in equilibrium. Such a downstream stocking distortion hurts the buyer firms own performance, and it also influences the performances of the supplier and the supply chain. We further reveal scenarios where full supply chain efficiency cannot be reached under any single buyback contract. Then, focusing on contract design, we characterize conditions under which a menu of buyback contracts can prevent downstream stocking distortion and restore full efficiency in the supply chain. Our study demonstrates that in a supply chain context, a firms incentive to undertake real economic activities to influence capital market valuation can potentially be resolved through operational means. This paper was accepted by Yossi Aviv, operations management.

Provision of Incentives for Information Acquisition: Forecast-Based Contracts vs. Menus of Linear Contracts

In the producer–seller relationship, the seller, besides his role of selling, is often in an ideal position to gather useful market information for the producer’s operations planning. Incentive alignment is critical to motivate both information-acquisition and sales efforts. Two popular contract forms are investigated. One is the forecast-based contract (FC) that requires the seller to submit a demand forecast: the seller obtains commissions from the realized sales but is also obliged to pay a penalty for any deviation of the sales from the forecast. The other is the classical menu of linear contracts (MLC), from which the seller can choose a contract that specifies a unique commission rate and a fixed payment. The conventional understanding suggests that the MLC is superior, but it is often assumed that information is exogenously endowed. In contrast, we find that, with an endogenous information-acquisition effort, the MLC may suffer from a conflicted moral hazard effect that creates friction between motivations for the two efforts. The FC can, however, decouple these two tasks and thus dominate the MLC. We further find that when ensuring interim participation is necessary (e.g., renegotiation cannot be prevented after information acquisition), the performance of the FC might be affected by the adverse selection effect because it is unable to effectively separate different types, at which the MLC excels. We show that when the demand and supply mismatch cost is substantial, the conflicted moral hazard effect dominates the adverse selection effect, and the FC is more efficient, and it is the converse otherwise. These findings can enrich the understanding of these two contract forms and are useful for sales and operations planning. This paper was accepted by Yossi Aviv, operations management .