2003 Meeting

Session I: Monday, Oct 20 th, 4:30 – 6:00

"The Impact of Duplicate Orders on Demand Estimation and Capacity Investment" by M. Armony (NYU) and E. PLAMBECK (Stanford).

We investigate how duplicate orders can lead a manufacturer to overestimate the demand rate and customers' sensitivity to delay, and to make faulty decisions about capacity investment. Then we provide some guidance on demand estimation in the presence of duplicate orders.

"An SDP approach to moment bounds for distributions with convex properties" by I. POPESCU (INSEAD).

(Abstract not submitted)

"Supply Chain Relationships and Contracts: The Impact of Repeated Interaction on Capacity Investment and Procurement" by E. Plambeck (Stanford) and T. TAYLOR ( Columbia).

The supplier of an innovative product must invest in capacity before the buyer can write a contract. When the price is negotiated, his capacity cost will be sunk (irrelevant). Anticipating hold-up, the supplier buys little capacity. However, with repeated innovation and capacity investment, the buyer promises to purchase at a price that reflects the cost of capacity and the supplier buys more capacity. The value of future cooperation induces the buyer to pay the supplier as promised.

Session II: Monday, Oct 20th, 4:30 – 6:00

"A Stochastic Integer Programming Approach to Solving a Synchronous Optical Network Ring Design Problem" by J.C. SMITH ( Arizona), A. Schaefer

We develop a decomposition procedure for solving a SONET design problem with uncertain demands.  To overcome the weaknesses inherent to typical L-shaped implementations, we enforce conditions regarding shortage penalty contributions to the objective function within the master problem.  We also detail how a nonlinear reformulation of the model captures exponential sets of optimality cuts.

"Long-Distance Access Network Design" by R. BERGER (Lehigh) and

Long-distance telephone companies in the U.S. pay access fees to local telephone companies to transport calls on their networks. We develop a three-phase optimization-based solution approach for the economic design of access networks.  Computational results indicate a potential cost savings of hundreds of millions of dollars annually for long- distance companies.

"Supply Chain Choice on the Internet" by S. Netessine (Wharton) and N. RUDI ( Rochester).

Internet companies extensively use the practice of drop-shipping, where the wholesaler stocks and owns the inventory and ships products directly to the customers. Another channel alternative is that in which the retailers stock and own the inventory. We analytically characterize situations where one or the other channel is preferable and also explore hybrid arrangements.