Category Archives: Operations Management

Intersection of Behavioral Operations and Energy

An intersection I am very interested in with my research interests. From an interview with Tendril CEO Adrian Tuck:

Under today’s demand response — whether you are turning someone’s air conditioning off or sending them a message to do something else — you are really just making a problem on the network the customer’s problem. Nobody else does that.

Netflix is an example that I often use. Netflix often has huge capacity-constraint issues, but they don’t tell you not to watch a movie on Saturday night or charge you more during a peak time. They just do really clever things behind the scenes. It might take slightly longer to spool the movie up on a Saturday night than it does on a Tuesday morning, or the pixelation on the movie is not quite as good as it would be — but they manage all of that to ensure the service.

The utility equivalent would be to tell people not to watch a movie on Saturday night. I think a fixed-price model — say $200 per month based on what you use — is better than a time-of-use rate. Time-of-use just takes a problem on the network and makes it a customer’s problem. I think the company that uses all these smart technologies to deliver a flat price of energy, and to take away demand response or time-of-use, is going to succeed in the market.

Book Review- Cradle to Cradle

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Cradle to Cradle: Remaking the Way We Make Things
by Michael Braungart and William McDonough, 2002

Short read about how everyone could do better in their product design. In our disposable culture, we’re used to throwing things away after use. At best, we recycle. This book points out the waste of this approach. Throwing away traps useful minerals and materials in a landfill. Recycling typically means down-cycling, whereby a product is turned into something less useful after recycling (think about how recycled paper is never fully white and thus is not as useful for reading). The book’s authors argue that with upfront thought, designers could craft products that are beneficial both during use and after use has ended. If the remnants of the product are easily turned into a new product, then the product is more environmentally responsible, more useful, and more sustainable. Luckily, these benefits can often be obtained at a lower cost than traditional manufacturing, though some significant design insight may be necessary.

The book’s title, Cradle to Cradle, alludes to a circular product world (a closed-loop supply chain) instead of the more typical and linear Cradle to Grave.

I listened to this book from my library via the hoopla app while on my way home from the POMS conference.

Teaching Recap- Spring 2016

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I taught 3 sections of BUS-P 300: Introduction to Operations Management this spring. It is a course for business minors, and I get a broad spectrum of student majors. Most students were second-semester seniors. Each section had 40-43 students. Here is a bit of postmortem for me for the course.

Things that went well:
-Each test was worth 137 points. This makes it harder for the student to calculate their grade percentage immediately and leads to less complaining. Even if someone gets a 90/137, that still looks like a good score, even though it is really close to a failing grade. Thanks to Richard Thaler for the suggestion.
-All hands-on activities went really well. We simulated a production line to make paper airplanes. We played the beer game online. We tried out some wisdom of the crowd forecasting. I wish there were more ready-made activities for operations courses.
-I added a significant segment on sustainability and a full lecture on behavioral OM. I think both subjects were enjoyable.
-Most students seemed to enjoy the final group project setup, where they got to select their own groups (if desired) and their own topics. Some students wanted more rigidity in the process (forced topics, forced groups, or a more detailed rubric), but more students enjoyed the creativity that the process allowed.
-Videos of manufacturing and service environments helped drive discussion points home. Most students have little/no experience with real-world operational settings.
-I’m glad I stuck with Managing Operations Across the Supply Chain, 2nd edition, by Swink et al. It’s a good introduction to operations for non-technical undergrads. All the necessary material was there. Choosing a more technical book would have been a disaster.
-This was my entire required teaching load at Kelley. While it was hard to teach three courses in a day in the short-term, I think it will be a good long-term decision when I have the next year+ to focus on research.

Things that didn’t go particularly well:
-I allowed students to use laptops during class if they wished. In the future, I will be more discerning about when/how I let them use computers. Getting attention and participation in one of my three sections was like pulling teeth. They all seemed to collude and decide to pay more attention to their computers than me. The other sections didn’t have major issues.
-I tried to steer students toward interesting research projects for their final group project, but I would say that about 25-33% of the topics chosen were just dull or simplistic. Most of these came from groups that didn’t give any indication of their choice prior to the topic deadline. I should make groups come talk to me about their topic prior to selection. Perhaps just before/after class in the 2 weeks leading up to topic selection deadline. (On the other hand, 25-33% of the topics were extraordinary for an intro course.)
-I used half a lecture to teach EOQ and Newsvendor basics. Without showing the solution (calculus) technique (for EOQ) or understanding statistics distributions (for Newsvendor), these topics aren’t memorable, and they were among the most-missed subjects on the homeworks/exams. Most students were not proficient in calculus or statistics. Find a way to teach their insights without showing the derivation next time. Besides these, all other simple equations/derivations seemed to go over well.
-My lectures got more interesting as the semester went on. I was building upon old slides from other grad students, and early on I was not altering them enough for my teaching style. I think some of the early lectures were probably boring. I should have made more significant edits early on.

Overall, a successful course.

Talks I attended at POMS 2016

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These are the talks I attended at the Production and Operations Management Society Conference, mostly listed for my future reference:

Friday 8am, Track 4:
-Optimal Workload Management During a Physician’s Shift in an Emergency Dept by Zhankun Sun and Nan Liu
-The Impact of Delay announcements on Hospital Networks Coordination and Waiting Times by Jing Dong, Elad Yom-Tov and Galit Yom-Tov
-An Empirical Study of the Impact of Introducing Physician Assistants During Critical Care Consultations by Mor Armony, Carri Chan, and Yunchao Xu
-Steady-State Approximation for Discrete Queue in Hospital Inpatient Flow Management by Pengyi Shi and Jim Dai

Friday 9:45am, Track 56
-Understanding Customers’ Retrials in Call Centers: Preference of Service Speed and Service Quality by Kejia Hu, Gad Allon, and Achal Bassamboo
-Modelling Service Times in a Call Center by Rouba Ibrahim, Pierre L’Ecuyer, Haipeng Shen, and Mamadou Thiongane
-Vertical Probabilistic Selling: The Role of Consumer Anticipated Regret by Yong Chao, Lin Liu, and Dongyuan Zhan
-Want Priority Access? Refer Your Friends to Skip the Line by Luyi Yang and Laurens Debo

Friday Plenary: Fulfillment Challenges Create Research Opportunities at Amazon by Russell Allgor

Friday 1:30pm, Track 80:
-Project Management under Risk-Sharing Contracts by Sina Shokoohyar, Elena Katok, and Anyan Qi
-The Impact of Decision Rights and Long Term Relationships on Innovation Sharing by Ruth Beer, Hyun-Soo Ahn, and Stephen Leider
(PRESENTING)-Linking Customer Behavior and Delay Announcements Using a Duration Model by Qiuping Yu, Eric Webb, and Kurt Bretthauer
-Equity Bargaining in Startups by Evgeny Kagan, Stephen Leider, and William Lovejoy

Friday 3:15pm, Track 133:
-Closing a Supplier’s Energy Efficiency Gap: The Role of Assessment Assistance and Procurement Commitment by Jason Nguyen, Karen Donohue, and Mili Mehrotra
(PRESENTING)-Energy Efficiency and Demand Response on a Production Line by Eric Webb, Kyle Cattani, and Owen Wu

Friday 5pm, Track 170:
-How to Get the Conflict Out of the Mineral Supply Chain by Han Zhang, Goker Aydin, and Sebastian Heese

Friday 5pm, Track 169:
-Carbon Leakage: The Impact of Asymmetric Emission Regulation on Technology and Capacity Investments by Kristel Hoen, Natalie Huang, Tarkan Tan, and Beril Toktay
-Carbon Tariffs: Effects in Settings with Technology Choice by David Drake
-Dynamics of Capacity Investment in Renewable Energy Projects by Nur Sunar and John Birge

Saturday 8am, Track 182:
-Variability in Labor Schedules: Effects on Customer Satisfaction and Employee Turnover by Hyun Seok Lee, Saravanan Kesavan, and Camelia Kuhnen
-Social Media and Traffic: A Cross-Section Study by Dennis Zhang and Ruomeng Cui
-Do Consumers Benefit from Dynamic Pricing? Evidence from SFpark by Pnina Feldman, Jun Li, and Hsin-Tien Tsai

Saturday 9:30am, Track 220:
-Impact of Severity-Adjusted Workload on Health Status of Patients Discharged from an ICU by Song-Hee Kim, Edieal Pinker, Joan Rimar, and Elizabeth Bradley
-Public Relative Performance Feedback in Complex Service Systems by Hummy Song, Anita Tucker, Karen Murrell, and David Vinson
-Quantifying the Impact of Care Coordination on Health Outcomes by Vishal Ahuja and Hari Balasubramanian
-Are Patients Patient? The Effect of Universal Healthcare on Emergency Department Visits by Diwas Kc

Saturday Plenary: Data-Driven Research in Revenue Management by David Simchi-Levi

Saturday 1:30pm, Track 267:
-An Analysis of Time-Based Pricing in Electricity Supply Chains by Baris Ata, Asligul Duran, and Ozge Islegen
-Kicking Ash: Who (or What) is Winning the War on Coal? by David Drake and Jeff York
-Feed-In Tariff Versus Rebate for Renewable Energy Generation by Ruben Lobel and Volodymyr Babich
-A New Approach to Power Purchase Agreement (PPA) Design for Wind Energy Projects by Xinyuan Zhu and Qingbin Cui

Saturday 3:15pm, Track 303:
-The Effect of Sourcing Policies on a Supplier’s Sustainable Practices by Vishal Agrawal and Deishin Lee
-Trust and Transparency in Social Responsibility by Tim Kraft, Leon Valdes, and Yanchong Zheng
-Design and Technology Choice for Recycling: The Value of Capacity Ownership and collaboration by Luyi Gui, Morvarid Rahmani, and Atalay Atasu
-Truth-Inducing Mechanism for Medical Surplus Product Allocation by Can Zhang, Atalay Atasu, Turgay Ayer, and Beril Toktay

Sunday 9:45am, Track 373:
-A Hybrid Data Envelopment Analysis Approach for Performance Evaluation: A Food Industry Case Study by Gazi Duman, Ozden Tozanli, and Elif Kongar
-Evaluation of Different Designs of End-of-Life Products Using Linear Physical Programming by Aditi Joshi and Surendra Gupta
-Application of Multi Criteria Decision Making in Optimizing End-of-Life Processes by Aditya Pandit and Surendra Gupta
-Two-Dimensional Warranty for an End-of-life Derived Products by Ammar Alqahtani and Surendra Gupta

Sunday Plenary: Being Relevant in the Age of Analytics by Mark Spearman

Sunday 2:30pm, Track 409:
-The Implication of Extended Warranties on a Closed-Loop Supply Chain by Wayne Fu and Atalay Atasu
-A Framework to Measure the True Impact of Take-Back Legislation by Megan Jaunich, Hadi Gashti, Joe DeCarolis, Robert Handfield, Eda Kemahlioglu-Ziya, and Ranji Ranjithan
-The Effect of Refurbished Products’ Quality on Recycling Incentive Strategies under Retailer Take-back Mode by Xiaoyan Wang and Weilai Huang
-When Remanufacturing Meets Product Innovation by Gendao Li and Marc Reimann
-Lemons, Trade-Ins, and Remanufacturing by Natalie Huang, Atalay Atasu, and Beril Toktay

Sunday 4:15pm, Track 440:
-Competitive Dynamic Pricing Under Capacity Constraints: An Experimental Study by Bahriye Cesaret and Elena Katok

Monday 8am, Track 492:
-A Dynamic Clustering Approach to Data-Driven Assortment Personalization by Sajad Modaresi, Fernando Bernstein, and Denis Saure
-Managing Product Transitions via Strategic Customer Selection by Adam Elmachtoub, Vineet Goyal, and Roger Lederman

Monday 9:45am, Track 509:
-The Role of an Inpatient Value-Based Purchasing (VBP) Program and Slack in Improving Hospital Performance by John Ni and Xiaowen Huang
-Bundle Payment vs. Fee-For-Service: Impact of Payment Scheme on Performance by Elodie Adida, Hamed Mamani, and Shima Nassiri
-Impact of Healthcare Reform on Hospital Suppliers by Sayan Mukherjee, David Dobrzykowski, and Alok Baveja
-Are Penalties “Sticky” in the Long Term? An Empirical Investigation in U.S. Nursing Homes by Rachna Shah, Gopalakrishnan Narayanamurthy, and Anand Gurumurthy

Monday 11:30am, track 556:
-Impact of Digital Embeddedness on Organizational Purchase Behaviors by Haris Krijestorac and Rajiv Garg
-An Empirical Analysis of the Effect of Jump Bidding in Overlapping Online Auctions by Lin Hao, Yong Tan, and Arvind Tripathi
-Exploring the Drivers of Success of Mobile Apps by Eunho Park, Ram Janakiraman, Kaushik Dutta, and Subodha Kumar

My Presentations at POMS in Orlando this Friday

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I will be at POMS’ conference in Orlando this week. POMS is the Production and Operations Management Society. Here are my presentations:
1. At 1:30pm Friday, I will be presenting my behavioral paper with Qiuping Yu and Kurt Bretthauer in session 80. I’m guessing the room is “Lanai”? The paper’s working title is “Linking Customer Behavior and Delay Announcements: Are Customers Really Rational?”, though it says “Linking Customer Behavior and Delay Announcements Using a Duration Model” on the schedule.
2. At 3:15pm Friday, I will be presenting my energy paper with Owen Wu and Kyle Cattani in session 133. I’m guessing the room is “Camelia”? The paper’s working title is “Mind the Gap: Coordinating Energy Efficiency and Demand Response”, though it says “Energy Efficiency and Demand Response on a Production Line” on the schedule.

Bonus presentation: If you’re more into healthcare,
3. Also at 1:30 Friday, in Salon 6, Alex Mills will be presenting “Incentive-Compatible Pre-hospital Triage in Emergency Medical Services”. I am listed as the presenter on the schedule for that presentation, but I cannot be in two places at once. I’m not particularly happy at POMS for putting all three of my presentations in the span of 3 hours during a 4 day conference.

I will be at the Behavioral Mini-Conference in the morning on Thursday and the Supply Chain Tour in the afternoon on Thursday. See you in Orlando!

Accepted to Present at Behavioral Operations Conference, July 15

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My paper with Qiuping Yu and Kurt Bretthauer, “Linking Customer Behavior and Delay Announcements: Are Customers Really Rational?”, was accepted to be presented at the Behavioral Operations Conference at the University of Wisconsin-Madison on July 15. The conference is a single-track conference focused on issues in behavioral operations, so everyone at the conference can hear my presentation. More details here: Behavioral Operations Conference.

Here is my accepted 1-page abstract.

Other cool things happening at this conference:
-There is a Young Scholars Workshop on Friday, which offers advice to graduate students and young faculty members.
-Justin Sydnor is presenting a tutorial at the Young Scholars Workshop. I took two classes, Game Theory and Behavioral Economics, with Professor Sydnor at Case Western. He’s now at UW-Madison.
-As far as I can tell, I am one of four graduate students accepted to present at the main conference. 14 talks will be given. Everyone else is faculty.
-Asa Palley, who will be starting as an Assistant Professor at IU next fall, is presenting on the second day of the main conference.

Book Review- Make or Break: How Manufacturing Can Leap from Decline to Revitalization

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Make or Break: How Manufacturing Can Leap from Decline to Revitalization
by Kaj Grichnik and Conrad Winkler, with Jeffrey Rotheeder, 2008

I’m teaching “Introduction to Operations Management” this semester, and this book is a great compliment to that course. It discusses the state of manufacturing in the US (circa 2008) and the challenges facing the manufacturing sector of the economy in the near future. In the US and elsewhere, manufacturing jobs are not seen as ideal destinations for many workers anymore, making it difficult to secure skilled workers. Even in corporate hierarchies, the manufacturing head is often looked to only for cost-cutting improvements, not true innovation or competitive advantage. Very few organizations, including Proctor & Gamble and Toyota, know how to appropriately treat their manufacturing functions to cultivate them into strengths. The term “make or break” in the title refers to the fact that, for goods producers, the manufacturing function can make or break the business’s success. The book’s discussions of corporate strategy, lean manufacturing, and innovation all mesh nicely with my Intro OM lectures.

I got a lot of nifty vignettes and examples for my class from this book, and it is a short, easy read. Booz Allen Hamilton produced the book. I was a consultant at BAH from 2011-2013, though I did not interact with any workers involved in manufacturing efforts.

Mind the Gap: Coordinating Energy Efficiency and Demand Response

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Updated abstract for my work with Kyle Cattani and Owen Wu:

Traditionally, energy demand-side management techniques, such as energy efficiency and demand response, are each evaluated in isolation. In this paper, we examine the interactions between long-term energy efficiency upgrades and daily demand response participation at an industrial firm. We find that energy efficiency and demand response act as substitutes in terms of reduction of peak electricity demand, and the long-studied energy efficiency gap between firm-optimal and societal-optimal levels of energy efficiency is smaller when demand response is considered. Using a representative model of the firm’s production and the society’s energy generation, we derive insights into the optimal choices of energy efficiency installation and demand response participation from both the firm’s and societal perspectives. We suggest three approaches to reducing the energy efficiency gap, including an original suggestion that relies upon the interactions between energy efficiency and demand response.

Plot Watt

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Interesting talk at the Bloomington Data Collective Meetup last night by Zach Dwiel of Plot Watt. Plot Watt uses energy sensors in households and restaurants to find opportunities to save energy. In restaurants, the use cases might be
-discovering that the restaurant’s outdoor lights stay on all night despite the restaurant closing at 10pm
-noticing when the fryer is left on after closing and alerting management
-realizing that the appliances in use are much less energy efficient than similar appliances at other locations
-determining poor installs that are costing energy
-finding poorly specified defaults on the HVAC or refrigeration units.

Zach is part of the software team that is in charge of dis-entangling the differnet signals in the electric load to determine when specific appliances/lights/HVAC are clicking on/off. This is a very difficult problem, and the academic literature has been limited by solid “truth” examples from which to learn/train. Zach discussed how Plot Watt is using machine learning to try to get at the problem. They may have the most data on this problem of anyone.

Related: It looks like a startup may be trying to automate this approach and bring it to more households.

Thanks to Crisson for the invite to the meetup.

Optimal Basketball Strategy

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Interesting post at Nylon Calculus about the things that can be optimized in a basketball strategy.

1. Allocative efficiency: Teams should allocate shots such that the marginal shot (the last “acceptable” shot) taken by each player on the court has an equal expected value for points.

2. Dynamic efficiency: Teams should pass up a shot that will lead to a lower expected value than what they could get with the remaining seconds on the shot clock.

3. Risk/reward tradeoff: Teams should choose shot strategies that maximize the probability of winning, not the number of points scored.

I agree that teams seem to be particularly bad at #3. It’s frustrating to see a team give up a big lead by hoisting up 3’s in an attempt to run the other team out of the building.

NBA players’ intuitive feel for the risk/reward tradeoff seems to have a number of deficiencies. Generally, NBA teams do respond correctly to “underdog” situations: they increase the proportion of 3’s taken when they have a big deficit and little time remaining. But they respond incorrectly to situations where they are favored. Where they should play conservatively (making safe, low-variance plays), they actually play less conservatively: taking more 3’s, for example.

In situations where the game is very close, NBA teams seem to become highly risk averse. For example, in such situations teams tend to take a suboptimally small number of 3-pointers.