Master production scheduling under uncertainty with controllable processing times

Ankara : The Department of Industrial Engineering and the Institute of Engineering and Science of Bilkent University, 2009.Thesis (Master's) -- Bilkent University, 2009.Includes bibliographical references leaves 75-78.Master Production Schedules (MPS) are widely used in industry especially within Enterprise Resource Planning (ERP) Software. MPS assumes infinite capacity, fixed processing times and a single scenario for demand forecasts. In this thesis, we questioned these assumptions and considered a problem with finite capacity, controllable processing times and finally and most importantly, several demand scenarios instead of just one. We used a multi-stage stochastic programming approach in order to come up with maximum expected profit given the demand scenarios. We used controllable processing times, which are feasible in most of the scheduling practice in industry, to achieve a flexibility in capacity usage. We provided a non-linear mixed integer programming formulation for our problem. Afterwards, we analyzed two sub-problems to simplify the structure of the objective function and suggested alternative linearizations. We considered easier cases of our problem, proposed sufficient conditions for optimality and established the computational complexity status for two special cases. We conducted three experiments, to test computational performance of the formulations, to analyze the profit performance of the multi-stage solutions and finally, to analyze the effect of controllability on profit. Our computational studies show that one of the proposed formulations solves large instances in a very small amount of time. The second experiment suggests that the performance of multi-stage solutions is significantly better than the one of solutions obtained using single scenario strategies in terms of relative regret. Finally, the third experiment shows that controllability significantly increases the performance of multi-stage solutions.Körpeoğlu, ErsinM.S

Sourcing Innovation and Production

We consider a buyer firm that sources the design and production of an innovative product from two suppliers. The value of a supplier's design depends on the supplier's effort, while the production cost is the supplier's private information. A supplier can potentially produce the design of another supplier, albeit at a switching cost added to the production cost. Hence, a sourcing mechanism of an innovative product should both motivate suppliers' innovation efforts to improve the design value and identify low-cost production solutions. We first investigate two sourcing mechanisms commonly observed in practice, under which the buyer commits to sourcing the design and the production jointly or separately. We then compare these two mechanisms with a no-commitment mechanism in which the buyer specifies the rules to select suppliers for design and production after receiving the designs submitted by suppliers. We also consider an enhanced-commitment mechanism in which the buyer commits to using the supplier who provides the best design for production. We compare the buyer's profit in each mechanism, and show that the mechanism of choice depends on the switching cost and the cost (effectiveness) of innovation investment to improve design values, because each mechanism has different capability to motivate innovation efforts and to achieve efficient design and production allocations. Our findings provide valuable managerial insights for practitioners and help explain why certain mechanisms are common in different industries

Market Entry of a Socially Responsible Retailer

As consumers become more conscious about social issues, they gain an additional "social benefit" when purchasing from a socially responsible retailer (or brand). This trend has motivated more socially responsible retailers (or brands) to enter the market with a "pre-commitment" to donate a certain proportion of their (A) profits or (B) revenues for social causes. In this paper, we present a game-theoretic model where a socially responsible retailer enters the market with an incumbent for-profit retailer and heterogeneous consumers. We examine the socially responsible retailer's pricing strategy and entry conditions, the impact of the socially responsible retailer's entry on the incumbent retailer's profit, and the conditions under which the incumbent retailer should deter (or tolerate) the socially responsible retailer's entry. Our equilibrium analysis generates the following insights. First, even if the incumbent retailer can profitably deter the socially responsible retailer's entry, the incumbent retailer can be better off tolerating it under certain conditions. Second, somewhat interestingly, the incumbent retailer is more likely to deter the type (B) retailer's entry even though such entry is less detrimental to the incumbent retailer

Product Development in Crowdfunding: Theoretical and Empirical Analysis

Problem definition: Crowdfunding goes beyond raising funds. Entrepreneurs often use crowdfunding to solicit feedback from customers in order to improve their products, and may therefore prefer to launch their crowdfunding campaigns using basic versions of their products with fewer features. However, customers may not be persuaded by a campaign if the product appears to be underdeveloped. In view of this trade-off, a key question for entrepreneurs is how much to develop a product before launching a crowdfunding cam- paign. / Methodology/results: Analyzing a game-theoretical model and testing its predictions empirically, we study: 1) how the development level of a product at campaign launch, measured by the initial number of product features, in uences whether customers will make comments that help entrepreneurs improve the product; 2) whether entrepreneurs continue to improve the product during the campaign; and 3) whether the campaign is successful. We show that, as the number of product features at campaign launch increases, the likelihood that customers will make comments and that the product will be improved during the campaign first increases but then decreases. Furthermore, the likelihood of campaign success first increases but then decreases with the number of product features at campaign launch. Finally, by analyzing the interactions between customer feedback, product improvement, and campaign success, we show that customer feedback motivates entrepreneurs to improve the product during the campaign. Moreover, entrepreneurs should take account of the initial number of features and customer feedback when improving the product, because oth- erwise product improvements can harm campaign success. / Managerial implications: Our study provides practical insights on how entrepreneurs can use crowdfunding to aid product development and improve- ment. Specifically, entrepreneurs should avoid overdeveloping their products before crowdfunding campaigns because, as well as decreasing the chance of campaign success, this could hinder their ability to save devel- opment costs (e.g., market research costs) through involving customers in product development

Market Entry of a Socially Responsible Retailer

As consumers become more conscious about social issues, they gain an additional “social benefit” when purchasing from a socially responsible retailer (or brand). This trend has motivated more socially responsible retailers (or brands) to enter the market with a “pre-commitment” to donate a certain proportion of their (A) profits or (B) revenues for social causes. In this paper, we present a game-theoretic model where a socially responsible retailer enters the market with an incumbent for-profit retailer and heterogeneous consumers. We examine the socially responsible retailer’s pricing strategy and entry conditions, the impact of the socially responsible retailer’s entry on the incumbent retailer’s profit, and the conditions under which the incumbent retailer should deter (or tolerate) the socially responsible retailer’s entry. Our equilibrium analysis generates the following insights. First, even if the incumbent retailer can profitably deter the socially responsible retailer’s entry, the incumbent retailer can be better off tolerating it under certain conditions. Second, somewhat interestingly, the incumbent retailer is more likely to deter the type (B) retailer’s entry even though such entry is less detrimental to the incumbent retailer