Markdown or Everyday Low Price? The Role of Behavioral Motives

We study a seller’s optimal pricing and inventory strategies when behavioral (nonpecuniary) motives affect consumers’ purchase decisions. In particular, the seller chooses between two pricing strategies, markdown or everyday low price, and determines the optimal prices and inventory level. Two salient behavioral motives that impact consumers’ purchase decisions and the seller’s optimal strategies are anticipated regret and misperception of product availability. Regret arises when a consumer initially chooses to wait but encounters stockout later, or when the consumer buys the product at the high price but realizes that the product is still available at the markdown price. In addition, consumers often perceive the product’s future availability to be different than its actual availability. We determine and quantify that both regret and availability misperception have significant operational and profit implications for the seller. For example, ignoring these behavioral factors can result in up to 10% profit losses. We contrast the roles of consumers’ strategic (pecuniary) motives with their behavioral (nonpecuniary) motives in affecting purchase, pricing, and inventory decisions. The presence of the behavioral motives reinstates the profitability of markdown over everyday low price, in sharp contrast to prior studies of only strategic motives that suggest the contrary. We characterize how and why strategic versus behavioral motives affect decisions in distinctive manners. In doing so, this paper also introduces and determines the behavioral benefits of pricing in leveraging consumers’ behavioral regularities. We advocate that tactics that may intensify consumers’ misperception of availability, such as disclosing low inventory levels, can have a far-reaching impact on improving the seller’s profit

Trust and Trustworthiness

In this chapter, we discuss when, how, and why trust and trustworthiness arise to support cooperation within and across organizations. To do so, we first define trust and trustworthiness, discuss how they can be quantified, and determine key components of trusting and trustworthy behavior. In addition, we identify building blocks of trust and trustworthiness and offer tangible insights about how to establish trusting and cooperative business/interorganizational relationships, based on both academic research and case studies from across industries

The NGO's Dilemma: How to Influence Firms to Replace a Potentially Hazardous Substance

We study a nongovernmental organization's (NGO's) decisions when it attempts to remove a potentially hazardous substance from commercial use in a market with competing firms. Specifically, we determine under what market and regulatory conditions an NGO should target the industry versus the regulatory body to influence firms to replace the substance. We examine how the NGO's strategy changes as the NGO's pragmatism (i.e., the extent to which the NGO incorporates firms' profits into its decision making) increases. Our results demonstrate that when the NGO is less pragmatic, it should examine the existing market structure to determine whether to target the industry or the regulatory body. However, as the pragmatism of the NGO increases, the NGO should increasingly leverage the competition between firms to ensure that a replacement is available to consumers. We examine multiple extensions including varying the competition dynamics, the NGO targeting both the industry and the regulatory body, the time discounting of replacement costs, and a firm potentially lobbying to counteract an NGO's activism. We show that the potential for a firm to lobby can benefit consumers by motivating the NGO to exert more effort and increase the market sensitivity to a substance, thereby forcing the firm to replace.National Science Foundation (U.S.) (Grant NSF/CAREER-0547021

Layer-by-Layer Epitaxy of Multilayer MoS2 Wafers

Two-dimensional (2D) semiconductor of MoS2 has great potential for advanced electronics technologies beyond silicon1-9. So far, high-quality monolayer MoS2 wafers10-12 are already available and various demonstrations from individual transistors to integrated circuits have also been shown13-15. In addition to the monolayer, multilayers have narrower band gaps but improved carrier mobilities and current capacities over the monolayer5,16-18. However, achieving high-quality multilayer MoS2 wafers remains a challenge. Here we report the growth of high quality multilayer MoS2 4-inch wafers via the layer-by-layer epitaxy process. The epitaxy leads to well-defined stacking orders between adjacent epitaxial layers and offers a delicate control of layer numbers up to 6. Systematic evaluations on the atomic structures and electronic properties were carried out for achieved wafers with different layer numbers. Significant improvements on device performances were found in thicker-layer field effect transistors (FETs), as expected. For example, the average field-effect mobility ({\mu}FE) at room temperature (RT) can increase from ~80 cm2V-1s-1 for monolayer to ~110/145 cm2V-1s-1 for bilayer/trilayer devices. The highest RT {\mu}FE=234.7 cm2V-1s-1 and a record-high on-current densities of 1.704 mA{\mu}m-1 at Vds=2 V were also achieved in trilayer MoS2 FETs with a high on/off ratio exceeding 107. Our work hence moves a step closer to practical applications of 2D MoS2 in electronics.Comment: 13 pages,4 Figure

A Tale of Two Food Chains: The Duality of Practices on Well‐being

© 2020 Production and Operations Management Society In this paper, we honor Stanford University Professor Hau Lee, who is a great inspiration and thought leader in the supply chain and operations management (SC&OM) field. Our discussion centers around one of the most challenging SC&OM problems—food production, distribution, and consumption from dirt to table. We advocate and link our notions of emergent regenerative, organic food value chains (ROFVC) with quadruple-aim performance (QAP) that connects financial outcomes with ecological, human, and socioeconomic well-being. To do so, we first overview the systemic problems underlying the conventional food supply chains (CFSC) that render them unsustainable in the long run. In contrast, we introduce salient distinctions between CFSC and the new paradigm of ROFVC that uphold QAP. We believe the ideas generated in this paper can move the food systems’ SC&OM design, implementation, and performance measurement from an efficiency-oriented industrial paradigm of large-scale, factory farming toward a more encompassing view of eco-responsible practices. In CFSC, the many hidden costs are cumulative and have broad deleterious consequences; however, in ROFVC, pollution is shunned and “taxed,” and sustainability, as a public good, is rewarded by sequestering greenhouse gas (GHG) emissions and maintaining biodiversity, living soil, as well as clean air and water. We conclude with research, teaching, and policy agendas. We believe that the underlying principles here cut across sectors by fostering the introduction of regenerative business models that take a system's view in capturing QAP in their value chain strategy and execution

Motivating Supplier Social Responsibility Under Incomplete Visibility

Problem definition: We examine how a profit-driven firm (she) can motivate better social responsibility (SR) practices by a supplier (he) when these practices cannot be perfectly observed by the firm. We focus on the firm's investment in the supplier's SR capabilities. To capture the influence of consumer demands, we incorporate the potential for SR information to be disclosed by the firm or revealed by a third party. Academic/ practical relevance: Most firms have limited visibility into the SR practices of their suppliers. However, there is little research on how a firm under incomplete visibility should (i) invest to improve a supplier's SR practices and (ii) disclose SR information to consumers. We address this gap. Methodology: We develop a game-theoretic model with asymmetric information to study a supply chain with one supplier and one firm. The firm makes her investment decision given incomplete information about the supplier's current SR practices. We analyze and compare two settings: the firm does not disclose versus she discloses SR information to the consumers. Results: The firm should invest a high (low) amount in the supplier's capabilities if the information she observes suggests the supplier's current SR practices are poor (good). She should always be more aggressive with her investment when disclosing (versus not disclosing). This more aggressive strategy ensures better supplier SR practices under disclosure. When choosing between disclosing and not disclosing, the firm most likely prefers not to disclose when the supplier's current SR practices seem to be average. Managerial implications: (i) Greater visibility helps the firm to better tailor her investment to the level of support needed. (ii) Better visibility also makes the firm more “truthful” in her disclosure, whereas increased third-party scrutiny makes her more “cautious.” (iii) Mandating disclosure is most beneficial for SR when the suppliers' current practices seem to be average

Economically Motivated Adulteration in Farming Supply Chains

© 2019 INFORMS. Economically motivated adulteration (EMA) is a serious threat to public health. In this paper, we develop a modeling framework to examine farms' strategic adulteration behavior and the resulting EMA risk in farming supply chains. We study both "preemptive EMA," in which farms engage in adulteration to decrease the likelihood of producing lowquality output, and "reactive EMA," in which adulteration is done to increase the perceived quality of the output. We fully characterize the farms' equilibrium adulteration behavior in both types of EMA and analyze how quality uncertainty, supply chain dispersion, traceability, and testing sensitivity (in detecting adulteration) jointly impact the equilibrium adulteration behavior. We determine when greater supply chain dispersion leads to a higher EMA risk and how this result depends on traceability and testing sensitivity. Furthermore, we caution that investing in quality without also enhancing testing capabilities may inadvertently increase EMA risk. Our results highlight the limitations of only relying on end-product inspection to deter EMA. We leverage our analyses to offer tangible insights that can help companies and regulators to more proactively address EMA risk in food products

Behavioral Operations: Past, Present, and Future

Copyright: © 2019 INFORMS Behavioral operations is now an established and fundamental research field dedicated to understanding how the behavior of managers, workers, and customers influences operational decisions and outcomes. Just 20 years ago, behavioral research within operations management was relatively small and dispersed. Manufacturing & Service Operations Management has played an integral role in the field’s development since then through its openness to new research questions and methodologies. In this article, we reflect on the research goals pursued in behavioral operations as well as the operational contexts explored. We also share thoughts on promising areas for future research

Trust, Trustworthiness, and Information Sharing in Supply Chains Bridging China and the United States

Whether and how trust and trustworthiness differ between a collectivist society, e.g., China, and an individualistic one, e.g., the United States, generates much ongoing scientific debate and bears significant practical values for managing cross-country transactions. We experimentally investigate how supply chain members' countries of origin—China versus the United States—affect trust, trustworthiness, and strategic information sharing behavior in a cross-country supply chain. We consider a two-tier supply chain in which the upstream supplier solicits demand forecast information from the retailer to plan production; but the retailer has an incentive to manipulate her forecast to ensure abundant supply. The levels of trust and trustworthiness in the supply chain and supplier's capability to determine the optimal production quantity affect the efficacy of forecast sharing and the resulting profits. We develop an experimental design to disentangle these three aspects and to allow for real-time interactions between geographically distant and culturally heterogeneous participants. We observe that, when there is no prospect for long-term interactions, our Chinese participants consistently exhibit lower spontaneous trust and trustworthiness than their U.S. counterparts do. We quantify the differences in trust and trustworthiness between the two countries, and the resulting impact on supply chain efficiency. We also show that Chinese individuals exhibit higher spontaneous trust toward U.S. partners than Chinese ones, primarily because they perceive that individuals from the United States are more trusting and trustworthy in general. This positive perception toward U.S. people is indeed consistent with the U.S. participants' behavior in forecast sharing. In addition, we quantify that a Chinese supply chain enjoys a larger efficiency gain from repeated interactions than a U.S. one does, as the prospect of building a long-term relationship successfully sustains trust and trustworthiness by Chinese partners. We advocate that companies can reinforce the positive perception of westerners held by the Chinese population and commit to long-term relationships to encourage trust by Chinese partners. Finally, we also observe that both populations exhibit similar pull-to-center bias when solving a decision problem under uncertainty (i.e., the newsvendor problem)