Optimal Mechanisms for Heterogeneous Multi-cell Aquifers

Standard economic models of groundwater management impose restrictive assumptions regarding perfect transmissivity (i.e., the aquifer behaves as a bathtub), no external effects of groundwater stocks, observability of individual extraction rates, and/or homogenous agents. In this article, we derive regulatory mechanisms for inducing the socially optimal extraction path in Markov perfect equilibrium for aquifers in which these assumptions do not hold. In spite of the complexity of the underlying system, we identify an interesting case in which a simple linear mechanism achieves the social optimum. To illustrate potential problems that can arise by erroneously imposing simplifying assumptions, we conduct a simulation based on data from the Indian state of Andhra Pradesh.Common Property Resource, Differential Games, Groundwater Extraction, Imperfect Monitoring, Markov Perfect Equilibrium

Optimal Capacity Conversion for Product Transitions Under High Service Requirements

We consider the capacity planning problem during a product transition in which demand for a new-generation product gradually replaces that for the old product. Capacity for the new product can be acquired both by purchasing new production lines and by converting existing production lines for the old product. Furthermore, in either case, the new product capacity is “retrofitted” to be flexible, i.e., to be able to also produce the old product. This capacity planning problem arises regularly at Intel, which served as the motivating context for this research. We formulate a two-product capacity planning model to determine the equipment purchase and conversion schedule, considering (i) time-varying and uncertain demand, (ii) dedicated and flexible capacity, (iii) inventory and equipment costs, and (iv) a chance-constrained service-level requirement. We develop a solution approach that accounts for the risk-pooling benefit of flexible capacity (a closed-loop planning approach) and compare it with a solution that is similar to Intel's current practice (an open-loop planning approach). We evaluate both approaches with a realistic but disguised example and show that the closed-loop planning solution leads to savings in both equipment and inventory costs and matches more closely the service-level targets for the two products. Our numerical experiments illuminate the cost trade-offs between purchasing new capacity and converting old capacity and between a level capacity plan versus a chase capacity plan.Semiconductor Research Corporation (Grant 2215.001

Contract farming with possible reneging in a developing country: Can it work?

Abstract We consider a processed-food manufacturer that faces uncertain exogenous demand and procures a farm crop either from the outside market or from local farmers via contract farming. The contract price is determined at the beginning of the season when the market price is still uncertain. When the market price is realised, we allow the farmer the possibility of reneging from the contract, which occurs if the market price is sufficiently high. We show that granting farmers the option of reneging on the contract may improve the manufacturer's expected profit, and identify the conditions under which such an improvement can be expected

A Three-Party Case Study: Exploring the Value of Student Work in Co-creation in Teaching and Learning

In the context of a large first-year business course, we explore the value of student contributors, the former students from this course, working with faculty to improve the learning experience of the students enrolled in the course. By describing our study of the roles, impacts, benefits, and challenges of the student contributors’ involvement in creating supplemental resources, such as videos and practice problems, intended to augment the teaching process of the faculty and the learning process of the student learners, we contribute to the understanding of this three-party experience. Our study included interviews, survey questions, and resource-engagement analytics. We found that because student contributors can provide unique perspectives, greater inclusivity, and diverse approaches to teaching, there are benefits to the instructors, the student contributors, and the student learners

(s, S) Optimality in Joint Inventory-Pricing Control:

We study a stationary, single-stage inventory system, under periodic review, with fixed ordering costs and multiple sales levers (such as pricing, advertising, etc.). We show the optimality of (s, S)-type policies in these settings under both the backordering and lost-sales assumptions. Our analysis is constructive, and is based on a condition which we identify as being key to proving the (s, S) structure. This condition is entirely based on the single-period profit function and the demand model. Our optimality results complement the existing results in this area. Area of review: Manufacturing, Service and Supply Chain Operations 1

Inventory Management with Auctions and Other Sales Channels: Optimality of (s, S) Policies

We study periodic-review inventory replenishment problems with fixed ordering costs, and show the optimality of (s, S) inventory replenishment policies. Inventory replenishment is instantaneous, i.e., the lead time is zero. We consider several sales mechanisms, e.g., auction mechanisms, name-your-own-price mechanisms, and multiple heterogeneous sales channels. We prove this result by showing that these models satisfy a recently-established sufficient condition for the optimality of (s, S) policies. Thus, this paper shows that the optimality of (s, S) policies extends well beyond the traditional sales environments studied so far in the inventory literature.(s, S) policies, stochastic inventory systems, fixed cost, auction, multiple sales channels

A sample-path approach to the optimality of echelon orderup-to policies in serial inventory systems

Abstract We present a new proof of the optimality of echelon order-up-to policies in serial inventory systems, first proved by Clark and Scarf. Our proof is based on a sample-path analysis as opposed to the original proof based on dynamic programming induction

Sequential resource allocation with constraints: Two-customer case

We study a two-customer sequential resource allocation problem with equity constraint, which is reflected by a max–min objective. For finite discrete demand distribution, we give a sufficient and necessary condition under which the optimal solution has monotonicity property. However, this property never holds with unbounded discrete distribution