Knowledge that Transforms

We consider the problem of scheduling operations in bufferless robotic cells that produce identical parts using either single‐gripper or dual‐gripper robots. The objective is to find a cyclic sequence of robot moves that minimizes the long‐run average time to produce a part or, equivalently, maximizes the throughput. Obtaining an efficient algorithm for an optimum k‐unit cyclic solution ( k ≥ 1) has been a longstanding open problem. For both single‐gripper and dual‐gripper cells, the approximation algorithms in this paper provide the best‐known performance guarantees (obtainable in polynomial time) for an optimal cyclic solution. We provide two algorithms that have a running time linear in the number of machines: for single‐gripper cells (respectively, dual‐gripper cells), the performance guarantee is 9/7 (respectively, 3/2). The domain considered is free‐pickup cells with constant intermachine travel time. Our structural analysis is an important step toward resolving the complexity status of finding an optimal cyclic solution in either a single‐gripper or a dual‐gripper cell. We also identify optimal cyclic solutions for a variety of special cases. Our analysis provides production managers valuable insights into the schedules that maximize productivity for both single‐gripper and dual‐gripper cells for any combination of processing requirements and physical parameters.

Greater interdependence among workers and activities not only increases the need for internal communication, but it also imposes complications and barriers to effective information exchange. Intraorganizational communication capabilities of certain information systems can help overcome these barriers. However, the extent to which certain systems are promoted as communication tools depends largely on management's interpretation of their usefulness, which in turn may be largely dependent on operational context and managerial experience. We use a controlled experimental approach to study how these issues interact to impact managerial assessments of resource planning systems. Results show that managers value the communication capabilities of resource planning systems more so in highly task‐interdependent contexts and that these assessments are still more positive among managers with greater supervisory experience. As a result, these findings pose direct implications regarding the management support of technology use.

Motivated by the proliferation of multifunction products, we investigate product portfolio decisions of a single firm by analyzing the impact of three major factors. First, because multifunction products provide complete or partial functionalities of single‐function products, we incorporate substitution or cannibalization effects between the potential products. Second, we explicitly model the variable costs of manufacturing the single‐function and multifunction products. Third, we examine the firm's pricing decisions because of their impact on the degree of cannibalization between the multifunction product and one or more single‐function products. Using an economic model, we first characterize the firm's optimal product portfolio (through a quantity‐based decision), which in turn determines the market equilibrium prices for each product in its portfolio. Some of the unique insights stemming from our analysis are: (a) the optimal product portfolio choice is driven primarily by maximum profit margins for the single‐function products weighted by the demand substitution effects; and (b) from a product design perspective, the complete functionality of the base single‐function product is always included in the optimal product offering, but this is not necessarily the case with the complete functionality of the nonbase single‐function product.

Buyers often find that obtaining complete information about suppliers is costly. In such scenarios, there is a trade‐off between the costs of obtaining information and the benefits that accrue to the owners of such information. There are also various ways in which the missing information can be obtained or inferred. In this paper, we compare the efficiency of obtaining information via the classical mechanism design approach, which relies on the information available before the contracts are designed, with that of an “audit‐based” approach, which relies on the information obtained after the fact. In our model, a single buyer (the Stackelberg leader) wishes to procure a package of products or services from various competing suppliers that possess private cost information. We allow for arbitrary cost and revenue functions and can incorporate multiple cost and revenue drivers. We show how the buyer can optimize her profit and at the same time coordinate the channel by using a contract scheme involving auctions, audits, and profit sharing. We also examine the behavior of this mechanism when the supplier can exert effort to reduce cost but the cost of effort cannot be verified. We propose several mechanisms for different precontract informational scenarios and compare their performance.

We investigate trade‐offs among markups, service quality, and product attributes across customer, Internet retailer, and wholesaler echelons. Research has documented the reality of retail price dispersion, but little is known about how retail markups, in particular, are related to service quality and product attributes. For example, do Internet retailers deliver superior service in return for high markups? Do product characteristics affect the relationship between service and markups for retailers? To examine these issues, we first developed a model of Internet retail profitability that separates revenues and costs related to sales from other profit sources. This framework allowed us to position our work alongside the extant literature about Internet retailing. Moreover, it led us to synthesize service quality dimensions found in Internet retailing studies. We subsequently developed a critical‐event study based on the profit model and the synthesis of service quality dimensions to delineate service aspects that retailers should emphasize to address buyers' utility. Finally, we collected data from Internet purchases across retailers to isolate markup‐service quality trade‐offs along our delineated service aspects. We find that high markups are associated with superior performance across service quality dimensions. Furthermore, this trade‐off becomes more acutely defined when products with variable popularity are transacted.

L ife‐cycle mismatch occurs when the life cycle of a product does not coincide with the life cycles of the parts used in that product. This is particularly a problem with products that contain electronic components that sometimes have life spans of only two years. The cost of mitigating component obsolescence, which may require redesigning the product, is often considerable. Thus, prudent product design necessitates the selection of electronic components and product architecture, considering the cost of mitigating an obsolete design and other costs related to the design and manufacture of a product. Accordingly, we develop and analyze a model that shows how a product design can be effectively tailored to a particular product's life cycle.

Multiple‐skill call centers propagate rapidly with the development of telecommunications. An abundance of literature has already been published on call centers. Here, we want to focus on centers that would typically occur in business‐to‐business environments; these are call centers that handle many types of calls but where the arrival rate for each type is low. To find an optimal configuration, the integrality of the decision variables is a much more important issue than for larger call centers. The present paper proposes an approach that uses elements of combinatorial optimization to find optimal configurations. We develop an approximation method for the evaluation of the service performance. Next, we search for the minimum‐cost configuration subject to service‐level constraints using a branch‐and‐bound algorithm. What is at stake is to find the right balance between gains resulting from the economies of scale of pooling and the higher cost or cross‐trained agents. The article shows that in most cases this method significantly decreases the staffing cost compared with configurations with only cross‐trained or dedicated operators.

We study how a commercial firm competes with a free open source product. The market consists of two customer segments with different preferences and is characterized by positive network effects. The commercial firm makes product and pricing decisions to maximize its profit. The open source developers make product decisions to maximize the weighted sum of the segments' consumer surplus, in addition to their intrinsic motivation. The more importance open source developers attach to consumer surplus, the more effort they put into developing software features. Even if consumers do not end up adopting the open source product, it can act as a credible threat to the commercial firm, forcing the firm to lower its prices. If the open source developers' intrinsic motivation is high enough, they will develop software regardless of eventual market dynamics. If the open source product is available first, all participants are better off when the commercial and open source products are compatible. However, if the commercial firm can enter the market first, it can increase its profits and gain market share by being incompatible with its open source competitor, even if customers can later switch at zero cost. This first‐mover advantage does not arise because users are “locked in,” but because the commercial firm deploys a “divide and conquer” strategy to attract early adopters and exploit late adopters. To capitalize on its first‐mover advantage, the commercial firm must increase its development investment to improve its product features.

With special reference to the banking industry, the objective of this study is to address managerial concerns over the impact of labor‐saving technologies on efficiency in the use of human resources. A bank is viewed as a collection of human, technology, and capital resources. Labor‐saving technologies are represented by two categories of technology resources—information technologies and patented in‐house process innovations. The estimation of a stochastic frontier manpower‐requirement function shows that, whereas information technology resources have a direct impact on efficiency in the use of human resources, in‐house process innovations have an indirect impact through spillovers. The reduction in labor costs resulting from a more efficient use of human resources is more than enough to cover the required increase in information technology expenditures. This cost‐reducing impact is stronger for firms currently employing a lower level of information technologies. The empirical findings also suggest a complementary relationship between information technologies and spillovers of in‐house process innovations. The empirical framework proposed in this study can help decision makers determine the optimal input mix of technology and human resources.

We study a model with a single supplier and a single buyer who interact multiple times before the buyer sells her product in the end‐consumer market. We show that when the supplier uses a wholesale price contract, even under perfect foresight, the supplier, the buyer, and the end consumers benefit from multiple trading opportunities versus a one‐shot procurement agreement.