To Sell and to Provide? The Economic and Environmental Implications of the Auto Manufacturer's Involvement in the Car Sharing Business

Motivated by the involvement of Daimler and BMW in the car sharing business we consider an OEM who contemplates introducing a car sharing program. The OEM designs its product line by accounting for the trade-off between driving performance and fuel efficiency. Customers have different valuations of driving performance and decide whether to buy, join car sharing, or rely on their outside option. Car sharing can increase the profit from selling. This happens when the OEM prefers to serve the lower-end customers through car sharing and the higher-end through selling. In this case, car sharing increases the efficiency of the vehicles used for the lower-end, and the price charged to the higher-end customers. This is more pronounced for higher-end OEMs, which may help explain Daimler's and BMW's involvement in car sharing. Despite the higher efficiency, car sharing may lower the OEM's Corporate Average Fuel Economy (CAFE) level even when it increases profit and decreases environmental impact. CAFE levels better reflect the environmental benefits of car sharing when they are based on the number of customers served and not the production volume. Finally, if anticipating aggressive CAFE standards, OEMs may include car sharing to better absorb the increase in the production cost

Effective medical surplus recovery

We analyze not-for-profit Medical Surplus Recovery Organizations (MSROs) that manage the recovery of surplus (unused or donated) medical products to fulfill the needs of underserved healthcare facilities in the developing world. Our work is inspired by an award-winning North American non-governmental organization (NGO) that matches the uncertain supply of medical surplus with the receiving parties’ needs. In particular, this NGO adopts a recipient-driven resource allocation model, which grants recipients access to an inventory database, and each recipient selects products of limited availability to fill a container based on its preferences. We first develop a game theoretic model to investigate the effectiveness of this approach. This analysis suggests that the recipient-driven model may induce competition among recipients and lead to a loss in value provision through premature orders. Further, contrary to the common wisdom from traditional supply chains, full inventory visibility in our setting may accelerate premature orders and lead to loss of effectiveness. Accordingly, we identify operational mechanisms to help MSROs deal with this problem. These are: (i) appropriately selecting container capacities while limiting the inventory availability visible to recipients and increasing the acquisition volumes of supplies, (ii) eliminating recipient competition through exclusive single-recipient access to MSRO inventory, and (iii) focusing on learning recipient needs as opposed to providing them with supply information, and switching to a provider-driven resource allocation model. We use real data from the NGO by which the study was inspired and show that the proposed improvements can substantially increase the value provided to recipients

Operational Hedging: A Review with Discussion

Abstract Motivated by the increasing prevalence of operational hedging in corporate-level risk management programs, this paper provides an extensive overview and synthesis of the existing literature on operational hedging. In particular, we focus on the treatment of operational hedging in the operations management literature. We then explore how the concept of operational hedging is studied in the fields of finance, strategy and international business. Finally, we discuss and critique the approaches adopted in the operations management literature in the context of the broader literature on the topic

The Impact of Budget Constraints on Flexible vs. Dedicated Technology Choice

Ministry of Education, Singapore under its Academic Research Funding Tier

Appendix to "Relicensing Fees as a Secondary Market Strategy"

Appendix to "Relicensing Fees as a Secondary Market Strategy

Relicensing as a Secondary Market Strategy

Secondary markets in the Information Technology (IT) industry, where used or refurbished equipment is traded, have been growing steadily. For Original Equipment Manufacturers (OEMs) in this industry, the importance of secondary markets has grown in parallel, not only as a source of revenue, but also because of their impact on these firms' competitive advantage and market strategy. Recent articles in the press have severely criticized some OEMs who are perceived to be actively trying to eliminate the secondary market for their products. Others have policies that enhance their secondary markets. The goal of this paper is to understand how an OEM's incentives and optimal strategies vis-a-vis the secondary market are shaped contingent on her relative competitive advantage, product characteristics and consumer preferences. The critical tradeoff that we examine is whether the indirect benefit from maintaining an active secondary market (the resale value effect) can outweigh the potentially negative e®ect of the sales of used products at the expense of new product sales (the cannibalization effect). To that end, we develop a model where the OEM can directly a®ect the resale value of her product through a relicensing fee charged to the buyer of the refurbished equipment. Moreover, we introduce a measure of the consumers' willingness to return their used products to account for the fact that the higher the price offered by a third-party entrant, the higher the ratio of returned products at their end-of-use. We analyze the OEM's decision in both the monopoly and the duopoly cases, characterize the optimal relicensing fee set by the OEM, and draw conclusions on the conditions that favor stimulating or deterring the secondary market

Translating a Global Emission-Reduction Framework for Subnational Climate Action: A Case Study from the State of Georgia

Subnational entities are recognizing the need to systematically examine options for reducing their carbon footprints. However, few robust and comprehensive analyses are available that lay out how US states and regions can most effectively contribute. This paper describes an approach developed for Georgia—a state in the southeastern United States called “Drawdown Georgia”, our research involves (1) understanding Georgia’s baseline carbon footprint and trends, (2) identifying the universe of Georgia-specific carbon-reduction solutions that could be impactful by 2030, (3) estimating the greenhouse gas reduction potential of these high-impact 2030 solutions for Georgia, and (4) estimating associated costs and benefits while also considering how the solutions might impact societal priorities, such as economic development opportunities, public health, environmental benefits, and equity. We began by examining the global solutions identified by Project Drawdown. The resulting 20 high-impact 2030 solutions provide a strategy for reducing Georgia’s carbon footprint in the next decade using market-ready technologies and practices and including negative emission solutions. This paper describes our systematic and replicable process and ends with a discussion of its strengths, weaknesses, and planned future research

The boomerang returns? Accounting for the impact of uncertainties on the dynamics of remanufacturing systems

Recent years have witnessed companies abandon traditional open-loop supply chain structures in favour of closed-loop variants, in a bid to mitigate environmental impacts and exploit economic opportunities. Central to the closed-loop paradigm is remanufacturing: the restoration of used products to useful life. While this operational model has huge potential to extend product life-cycles, the collection and recovery processes diminish the effectiveness of existing control mechanisms for open-loop systems. We systematically review the literature in the field of closed-loop supply chain dynamics, which explores the time-varying interactions of material and information flows in the different elements of remanufacturing supply chains. We supplement this with further reviews of what we call the three ‘pillars’ of such systems, i.e. forecasting, collection, and inventory and production control. This provides us with an interdisciplinary lens to investigate how a ‘boomerang’ effect (i.e. sale, consumption, and return processes) impacts on the behaviour of the closed-loop system and to understand how it can be controlled. To facilitate this, we contrast closed-loop supply chain dynamics research to the well-developed research in each pillar; explore how different disciplines have accommodated the supply, process, demand, and control uncertainties; and provide insights for future research on the dynamics of remanufacturing systems

Recovered materials: inter-industry synergy workshop

Issued as final reportNational Science Foundation (U.S.