@article{mohammadi_heese_kraft_2024, title={Environmental Regulation Design: Motivating Firms' Clean Technology Investments With Penalties and Subsidies}, volume={2}, ISSN={["1937-5956"]}, DOI={10.1177/10591478231224911}, abstractNote={The recently enacted Inflation Reduction Act (IRA) includes a number of incentive-based programs (e.g., tax credits) designed to motivate firms to develop new clean technologies for fighting climate change. However, the IRA also includes a fee firms incur for excessive methane emissions. This represents the first time the United States government has ever levied a fee on greenhouse gas emissions, and it raises an interesting research question—how should a budget-constrained regulator balance the use of both incentive and penalty-based levers for stimulating investment in clean technology development? In this paper, we examine a regulator’s optimal penalty and subsidy decisions for motivating firms to invest in clean technology development. We illustrate how the level of competitive intensity in the market can influence a budget-constrained regulator with multiple competing objectives—the environment, firm profits, and consumer welfare. We find that a subsidy is always beneficial, irrespective of the regulator’s objective. While imposing a firm penalty always benefits the environment, it always negatively impacts the sum of firm profits and consumer welfare. However, depending on the level of competition in the market, instances can occur where imposing a high penalty actually benefits total firm profits or consumer welfare (separately). Interestingly, a regulator that cares about all three dimensions of its objective equally, should always set the penalty to either its minimum or maximum value, depending on whether the environmental cost of the harmful product is high or low.}, journal={PRODUCTION AND OPERATIONS MANAGEMENT}, author={Mohammadi, Mina and Heese, H. Sebastian and Kraft, Tim}, year={2024}, month={Feb} }
 @article{gu_heese_kemahlioglu-ziya_ziya_2024, title={Pricing for services with cross-segment externalities, capacity constraints, and competition}, volume={313}, ISSN={["1872-6860"]}, DOI={10.1016/j.ejor.2023.09.021}, abstractNote={In many service systems such as movie theaters, sports clubs, or hotels, different customer segments share physical space, and the presence of customers from different segments may affect the utility a customer receives from the service. We consider a setting where two competing facilities offer service to two distinct types of customers and study whether and when the firms can benefit from using differential pricing. The two firms do not explicitly decide whether to use uniform or differential pricing. Rather, we derive our findings by characterizing and comparing all equilibria that might arise when differential pricing is feasible. Our results suggest that if the network externalities are symmetric, that is, if the two customer segments feel equally about the presence of customers of the other segment, then the firms never benefit from price differentiation, unless the network externalities are negative and strong when compared to the travel/inconvenience cost that the customers incur when receiving service from their less preferred facility. Interestingly, we find that using differential pricing can even hurt firm profits, when it leads to fierce price competition between the two service providers.}, number={2}, journal={EUROPEAN JOURNAL OF OPERATIONAL RESEARCH}, author={Gu, Wei and Heese, H. Sebastian and Kemahlioglu-Ziya, Eda and Ziya, Serhan}, year={2024}, month={Mar}, pages={801–813} }
 @article{schmidt_wuttke_heese_wagner_2023, title={Antecedents of public reactions to supply chain glitches}, volume={259}, ISSN={["1873-7579"]}, DOI={10.1016/j.ijpe.2023.108834}, abstractNote={Virtually all supply chains are at risk of glitches. Research suggests that supply chain glitches hurt a firm’s financial performance and evoke negative public reactions on social media. However, we know little about the drivers of public reactions to such adverse firm events. To generate new insights for academics and managers, we derive a set of hypotheses rooted in attribution theory and the triple bottom line literature. We empirically test our hypotheses by analyzing 215 supply chain glitches and 63 million associated tweets. We find stronger public reactions when people may attribute internal and local causes to a supply chain glitch. The impact of a glitch on the triple bottom line also influences the public reaction. Supply chain glitches related to more triple-bottom-line dimensions lead to more negative reactions in terms of both volume and sentiment. Anticipating that social media will play an even more vital role in the future and given that proactive measures are time-consuming, operations and supply chain managers should understand the effects of firm events on social media and adapt their risk management strategies accordingly.}, journal={INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS}, author={Schmidt, Christoph G. and Wuttke, David A. and Heese, H. Sebastian and Wagner, Stephan M.}, year={2023}, month={May} }
 @article{heese_kemahlioglu-ziya_2023, title={Capacity shortages, regulation, and firm incentives in the generic drugs industry}, volume={6}, ISSN={["1520-6750"]}, DOI={10.1002/nav.22132}, abstractNote={Abstract}, journal={NAVAL RESEARCH LOGISTICS}, author={Heese, H. Sebastian and Kemahlioglu-Ziya, Eda}, year={2023}, month={Jun} }
 @article{bai_heese_tripathy_2023, title={Hiding in plain sight: Surge pricing and strategic providers}, volume={9}, ISSN={["1937-5956"]}, DOI={10.1111/poms.14064}, abstractNote={Abstract}, journal={PRODUCTION AND OPERATIONS MANAGEMENT}, author={Bai, Jiaru and Heese, H. Sebastian and Tripathy, Manish}, year={2023}, month={Sep} }
 @article{tseytlin_heese_2023, title={Inventory allocation with full downward substitution and monotone cost differences}, volume={307}, ISSN={["1872-6860"]}, DOI={10.1016/j.ejor.2022.08.027}, abstractNote={We study a single-period multi-product inventory allocation problem with full downward substitution and monotone cost differences. The cost structure with monotone differences is more general than the additive cost structure usually assumed in literature. Using the notion of Monge sequences, we identify conditions under which the problem can be solved efficiently using greedy allocation. For problems that do not meet these conditions, we develop an efficient algorithm that solves the problem to optimality. For this specific problem, our algorithm has substantially lower computational complexity than existing efficient algorithms for the more general transportation problem; we numerically confirm this superior computational efficiency and illustrate the importance of using efficient algorithms at the allocation stage of the inventory management problem.}, number={1}, journal={EUROPEAN JOURNAL OF OPERATIONAL RESEARCH}, author={Tseytlin, Yulia and Heese, H. Sebastian}, year={2023}, month={May}, pages={130–139} }
 @article{gernert_wuttke_heese_2023, title={Sourcing and pricing decisions under upstream competition with a financially distressed supplier, endogenous bankruptcy risk, and a backup supply option}, volume={4}, ISSN={["1937-5956"]}, DOI={10.1111/poms.13986}, abstractNote={ To maintain future supplier competition, manufacturers may support financially distressed suppliers by sourcing from them, even if they are less efficient than competitors, and by procuring larger quantities from them at higher prices. We analyze these strategies in a model in which a manufacturer decides for one of two available suppliers, supplier bankruptcy risk is endogenous, and financial distress can lead to internal or external reorganization. Following bankruptcy, the remaining supplier may serve as a backup option. Our research identifies settings in which the manufacturer should support the distressed supplier. We also find that in some cases, a nondistressed supplier may charge price premiums due to its competitor's distress, while in other cases, it may use predatory pricing to drive its competitor into bankruptcy. We complement our results with a small case study and show how our model can explain patterns observed in industry. }, journal={PRODUCTION AND OPERATIONS MANAGEMENT}, author={Gernert, Andreas K. and Wuttke, David A. and Heese, H. Sebastian}, year={2023}, month={Apr} }
 @article{zhang_aydin_heese_2022, title={Curbing the usage of conflict minerals: A supply network perspective}, volume={7}, ISSN={["1540-5915"]}, DOI={10.1111/deci.12580}, abstractNote={ABSTRACT}, journal={DECISION SCIENCES}, author={Zhang, Han and Aydin, Goker and Heese, Hans Sebastian}, year={2022}, month={Jul} }
 @article{ahmed_heese_kay_2022, title={Designing a manufacturing network with additive manufacturing using stochastic optimisation}, volume={4}, ISSN={["1366-588X"]}, DOI={10.1080/00207543.2022.2056723}, abstractNote={Two of the major problems Traditional Manufacturing (TM) supply chains face are setting requisite reactive strategies to address the uncertainties in demand and the optimal placement of these buffering capacities in order to be both responsive and cost-effective. With Additive Manufacturing (AM) stepping into large-scale production at different firms, we address the aforementioned supply chain dilemmas by considering the potential role of AM in a TM supply chain network where AM facilities can act as a recourse to the TMs and, also, as a dedicated source providing responsive and cost-effective sourcing alternatives. We develop an analytical allocation rule based on cost differentials, which provides optimal sourcing decisions through sequential demand replenishment and facilitates an efficient performance evaluation of possible network configurations. We first model the scenario as a three-stage stochastic optimisation problem. We then solve it using the allocation rule and present an illustration of our analysis and the optimal supply chain network configuration. Furthermore, we derive some insights as to how different problem characteristics affect the value and usage of AM.}, journal={INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH}, author={Ahmed, Ramin and Heese, H. Sebastian and Kay, Michael}, year={2022}, month={Apr} }
 @article{tripathy_bai_heese_2022, title={Driver collusion in ride-hailing platforms}, volume={3}, ISSN={["1540-5915"]}, DOI={10.1111/deci.12561}, abstractNote={ABSTRACT}, journal={DECISION SCIENCES}, author={Tripathy, Manish and Bai, Jiaru and Heese, H. Sebastian}, year={2022}, month={Mar} }
 @article{luetkemeyer_heese_wuttke_gernert_2022, title={Pricing and market entry decisions in personalized medicine}, volume={253}, ISSN={["1873-7579"]}, DOI={10.1016/j.ijpe.2022.108584}, abstractNote={In the pharmaceutical industry, personalized medicine is increasingly replacing the traditional blockbuster drug concept. Personalized medicine consists of a targeted drug that is only prescribed if a companion diagnostic test detects the corresponding biomarker. This concept promises improved treatments of various diseases. However, personalized medicine also presents pharmaceutical firms with new challenges resulting from interdependencies in the drug and diagnostic test development processes. Although pharmaceutical firms generally benefit from competition among diagnostic firms, the threat of substitutes from competitors could cause diagnostic firms to step back from new product development in the first place, leading to lost revenues for the pharmaceutical firm. We consider a pharmaceutical firm that may inform two competing differentiated diagnostic firms about a drug under development, such that these firms can develop a corresponding diagnostic test. We show which diagnostic firm the pharmaceutical firm should inform first and how granting early exclusivity to a single diagnostic firm can maximize pharmaceutical profits from personalized medicine.}, journal={INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS}, author={Luetkemeyer, Daniel and Heese, H. Sebastian and Wuttke, David A. and Gernert, Andreas K.}, year={2022}, month={Nov} }
 @article{shi_helm_heese_mitchell_2021, title={An Operational Framework for the Adoption and Integration of New Diagnostic Tests}, ISBN={1937-5956}, DOI={10.1111/poms.13263}, abstractNote={ The gap between medical research on diagnostic testing and clinical workflow can lead to rejection of valuable medical research in a busy clinical environment due to increased workloads, or rejection of medical research in the laboratory that may be valuable in practice due to a misunderstanding of the system‐level benefits of the new test. This has implications for research organizations, diagnostic test manufacturers, and hospital managers among others. To bridge this gap, we develop a Markov decision process (MDP) from which we create “adoption regions” that specify the combination of test characteristics medical research must achieve for the test to be feasible for adoption in practice. To address the curse of dimensionality from patient risk stratification, we develop a decomposition algorithm along with structural properties that shed light on which patients and when a new diagnostic test should be used. In a case study of a partner Emergency Department, we show that the conventional myopic medical criterion can lead to poor decision making in both research development and clinical practice. In particular, we find that specificity—long a secondary consideration and often overlooked in the research process—is, in fact, the key to effective implementation of new tests into clinical environments. This myopic approach can lead to overvaluing or undervaluing new medical research. This mismatch is accentuated when a simple (current) policy is used to integrate research into the clinical environment compared with our MDP’s policy—poor implementation of a new test can also lead to unnecessary rejection. Our framework provides easily interpretable guidelines for medical research development and clinical adoption decisions that can guide medical research as to which test characteristics to focus on to improve the chances of adoption. }, journal={PRODUCTION AND OPERATIONS MANAGEMENT}, author={Shi, Pengyi and Helm, Jonathan E. and Heese, H. Sebastian and Mitchell, Alice M.}, year={2021} }
 @article{heese_kemahlioglu-ziya_perdikaki_2021, title={Outsourcing under Competition and Scale Economies: When to Choose a Competitor as a Supplier}, volume={52}, ISSN={["1540-5915"]}, DOI={10.1111/deci.12449}, abstractNote={ABSTRACT}, number={5}, journal={DECISION SCIENCES}, author={Heese, Hans Sebastian and Kemahlioglu-Ziya, Eda and Perdikaki, Olga}, year={2021}, month={Oct}, pages={1209–1241} }
 @article{gernert_heese_wuttke_2021, title={Subcontracting New Product Development Projects: The Role of Competition and Commitment}, volume={52}, ISSN={["1540-5915"]}, DOI={10.1111/deci.12484}, abstractNote={ABSTRACT}, number={5}, journal={DECISION SCIENCES}, author={Gernert, Andreas and Heese, H. Sebastian and Wuttke, David A.}, year={2021}, month={Oct}, pages={1039–1070} }
 @article{franke_foerstl_heese_2021, title={The Interaction Effect of Goal Misalignment and Metaknowledge Distribution on Team Decision Making in Operations and Supply Chain Management}, volume={52}, ISSN={["1540-5915"]}, DOI={10.1111/deci.12439}, abstractNote={ABSTRACT}, number={2}, journal={DECISION SCIENCES}, author={Franke, Henrik and Foerstl, Kai and Heese, H. Sebastian}, year={2021}, month={Apr}, pages={331–361} }
 @article{schmidt_wuttke_ball_heese_2020, title={Does social media elevate supply chain importance? An empirical examination of supply chain glitches, Twitter reactions, and stock market returns}, volume={66}, ISSN={["1873-1317"]}, DOI={10.1002/joom.1087}, abstractNote={Abstract}, number={6}, journal={JOURNAL OF OPERATIONS MANAGEMENT}, author={Schmidt, Christoph G. and Wuttke, David A. and Ball, George P. and Heese, Hans Sebastian}, year={2020}, month={Sep}, pages={646–669} }
 @article{tseytlin_heese_2019, title={Allocation under a general substitution structure}, volume={277}, ISSN={["1872-6860"]}, DOI={10.1016/j.ejor.2019.02.049}, abstractNote={We develop a novel solution approach for the single-period multi-product inventory allocation problem with general substitution structure. First, we construct an initial allocation sequence and present conditions for existence of a Monge sequence, implying optimality of a greedy solution. We prove that the greedy allocation along the initial sequence is optimal even if no Monge sequence exists, when in the solution all demand is satisfied and all inventory is used. For all other cases, we develop a correction algorithm and prove optimality of the resulting allocation. The worst-case computational complexity of our solution is superior to existing algorithms for the structurally related transportation problem.}, number={2}, journal={EUROPEAN JOURNAL OF OPERATIONAL RESEARCH}, author={Tseytlin, Yulia and Heese, H. Sebastian}, year={2019}, month={Sep}, pages={492–506} }
 @article{wuttke_rosenzweig_heese_2019, title={An empirical analysis of supply chain finance adoption}, volume={65}, ISSN={["1873-1317"]}, DOI={10.1002/joom.1023}, abstractNote={Abstract}, number={3}, journal={JOURNAL OF OPERATIONS MANAGEMENT}, author={Wuttke, David A. and Rosenzweig, Eve D. and Heese, Hans Sebastian}, year={2019}, month={Apr}, pages={242–261} }
 @article{heese_martínez-de-albéniz_2018, title={Effects of Assortment Breadth Announcements on Manufacturer Competition}, volume={20}, ISSN={1523-4614 1526-5498}, url={http://dx.doi.org/10.1287/msom.2017.0643}, DOI={10.1287/msom.2017.0643}, abstractNote={ Retailers typically use assortment planning to maximize store profits given product characteristics. We study the manufacturers’ price-setting interactions and how these can be manipulated by the retailer’s assortment strategy. We show that constraining the breadth of the assortment has two main effects on retailer profits: First, a larger assortment may intensify competitive pressure and decrease prices because manufacturers need to fight harder for market share. Second, a smaller assortment may also reduce manufacturer prices because manufacturers want to ensure that they are included in the chosen assortment, which may lead to higher profits despite lower variety and possibly lower revenues. We optimize retailer assortment strategies, taking into account these two effects. We find that when the manufacturers’ products are very different in terms of attractiveness, the first effect dominates while the second effect is stronger when products are comparable. Finally, our findings require that retailers communicate the assortment strategy properly: retailers should not disclose the identity of the chosen manufacturers, but should commit to a given assortment breadth. }, number={2}, journal={Manufacturing & Service Operations Management}, publisher={Institute for Operations Research and the Management Sciences (INFORMS)}, author={Heese, H. Sebastian and Martínez-de-Albéniz, Victor}, year={2018}, month={May}, pages={302–316} }
 @article{spiliotopoulou_donohue_gürbüz_heese_2018, title={Managing and reallocating inventory across two markets with local information}, volume={266}, ISSN={0377-2217}, url={http://dx.doi.org/10.1016/j.ejor.2017.09.042}, DOI={10.1016/j.ejor.2017.09.042}, abstractNote={Consider a firm that controls inventory centrally for two separate markets that are managed by regional managers having local demand information. The central planner provides a dedicated inventory level to each market, to ensure a minimum service level, but can reallocate inventory once associated demands are filled. How should such a firm solicit regional managers to share their local information so inventory levels can be set efficiently? In this paper, we study a forecast sharing game in such a firm, where demand information lies within regions and inventory is managed by a central decision maker. We show that incentives are misaligned and truthful information sharing is not an equilibrium. We study two potential ways to improve the system: a) regional managers directly place orders (rather than simply passing demand forecasts), or b) a pricing scheme for inventory reallocations is imposed. We show that under direct ordering a unique pure strategy Bayesian Nash equilibrium exists and makes retailers place orders based on their true forecasts, although the requested order quantities are not system optimal (e.g., some inventory pooling benefits are lost). Under an endogenous transfer pricing mechanism set by the central planner, we find that a first best truth telling equilibrium is possible under certain conditions. We conduct a numerical study to examine the different cases and find that when the critical fractile is high, direct ordering results in lower inventories while the reverse is true when the critical fractile is low. Expected profit comparisons show the value of local information.}, number={2}, journal={European Journal of Operational Research}, publisher={Elsevier BV}, author={Spiliotopoulou, Eirini and Donohue, Karen and Gürbüz, Mustafa Çagri and Heese, H. Sebastian}, year={2018}, month={Apr}, pages={531–542} }
 @article{wuttke_heese_2018, title={Two-dimensional cutting stock problem with sequence dependent setup times}, volume={265}, ISSN={0377-2217}, url={http://dx.doi.org/10.1016/j.ejor.2017.07.036}, DOI={10.1016/j.ejor.2017.07.036}, abstractNote={Motivated by a firm in the technical textile industry, we study a two-dimensional cutting stock problem with sequence dependent setup times and permissible tolerances. We provide a sequential heuristic with feedback loop based on the approach of Gilmore and Gomory and formulate the sequencing problem as a mixed integer program. We derive a lower bound algorithm and demonstrate the near-optimal performance of our heuristic. Finally, we use real data to test our heuristic and illustrate its applicability to a problem of realistic size.}, number={1}, journal={European Journal of Operational Research}, publisher={Elsevier BV}, author={Wuttke, David A. and Heese, H. Sebastian}, year={2018}, month={Feb}, pages={303–315} }
 @article{guo_heese_2017, title={Product variety and supply chain structure}, volume={55}, number={12}, journal={International Journal of Production Research}, author={Guo, S. and Heese, H.S.}, year={2017}, pages={3392–3410} }
 @article{heese_kemahlıoğlu-ziya_2016, title={Don't ask, don't tell: Sharing revenues with a dishonest retailer}, volume={248}, ISSN={0377-2217}, url={http://dx.doi.org/10.1016/j.ejor.2015.07.054}, DOI={10.1016/j.ejor.2015.07.054}, abstractNote={When different supply chain parties have private information, some form of information sharing is required to improve supply chain performance. However, it might be difficult to ensure truthful information transfer when firms can benefit from distorting their private information. To investigate the impact of dishonest information transfer, we consider a single-supplier single-retailer supply chain that operates under a contract with a revenue sharing clause, providing the retailer incentive to underreport sales revenues. In practice, suppliers utilize audits based on statistical tools that, for example, compare the retailers' sales reports and order quantities to limit, but not necessarily eliminate, cheating. We investigate the impact of such limited cheating on the different supply chain constituents. We show that when the retailer can exert sales effort, a supplier might benefit from the retailer's dishonesty. Our findings also suggest that if the retailer's negotiation power is high or if retailer effort is effective, the supplier should reduce the retailer's revenue share and absorb some of the demand risk to increase retailer participation. When facing a less powerful or less capable retailer, the supplier might be better off extracting profitability upfront through a higher wholesale price.}, number={2}, journal={European Journal of Operational Research}, publisher={Elsevier BV}, author={Heese, H. Sebastian and Kemahlıoğlu-Ziya, Eda}, year={2016}, month={Jan}, pages={580–592} }
 @article{guo_heese_2016, title={Product variety and distribution channel structure}, volume={55}, ISSN={0020-7543 1366-588X}, url={http://dx.doi.org/10.1080/00207543.2016.1240380}, DOI={10.1080/00207543.2016.1240380}, abstractNote={We consider how a manufacturer’s product variety decision is affected by its distribution strategy. While offering product variety will generally lead to higher demand, it also has negative implications on production costs and demand uncertainty. We investigate how the manufacturer’s optimal product variety decision differs when selling directly to customers (centralised scenario) as compared to selling through a retailer (decentralised scenario). We find that the retailer’s power and the impact of product variety on demand significantly affect the attractiveness of product variety and determine under which distribution strategy the manufacturer should provide a higher level of variety.}, number={12}, journal={International Journal of Production Research}, publisher={Informa UK Limited}, author={Guo, Shanshan and Heese, H. Sebastian}, year={2016}, month={Oct}, pages={3392–3410} }
 @article{hu_blocher_heese_zhou_2016, title={Scheduling products with subassemblies and changeover time}, volume={67}, ISSN={0160-5682 1476-9360}, url={http://dx.doi.org/10.1057/jors.2015.108}, DOI={10.1057/jors.2015.108}, abstractNote={We revisit the problem, previously studied by Coffman et al, of scheduling products with two subassemblies on a common resource, where changeovers consume time, under the objective of flow-time minimization. We derive some previously unidentified structural properties that could be important to researchers working on similar batch scheduling problems. We show that there exists a series of base schedules from which optimal schedules can be easily derived. As these base schedules build on each other, they are easy to construct as well. We also show that the structure of these base schedules is such that batch sizes decrease over time in a well-defined manner. These insights about the general form of the schedules might also be important to practitioners wanting some intuition about the schedule structure that they are implementing.}, number={8}, journal={Journal of the Operational Research Society}, publisher={Informa UK Limited}, author={Hu, Xinxin and Blocher, James D and Heese, Hans Sebastian and Zhou, Feng}, year={2016}, month={Aug}, pages={1025–1033} }
 @article{wuttke_blome_sebastian heese_protopappa-sieke_2016, title={Supply chain finance: Optimal introduction and adoption decisions}, volume={178}, ISSN={0925-5273}, url={http://dx.doi.org/10.1016/j.ijpe.2016.05.003}, DOI={10.1016/j.ijpe.2016.05.003}, abstractNote={Supply chain finance (SCF) can improve supply chain performance by facilitating longer payment terms for buyers and better access to financing for suppliers. In spite of these clear benefits, there is empirical evidence for some hesitation and resistance to SCF adoption, manifesting in an often substantial time lag between a buyer's introduction of SCF and its adoption by all targeted suppliers. Observed adoption processes often resemble the s-shaped Bass-curve suggesting that successful early adoptions support adoption decisions by other suppliers. Based on these observations, we consider supplier SCF adoption decisions within a diffusion model, to obtain insights regarding a buyer's optimal SCF introduction decisions in terms of timing and payment terms. We find that initial payment terms and procurement volume strongly affect the optimal timing of SCF introduction and optimal payment term extensions. The degree to which the buyer can influence suppliers in their adoption decisions affects the optimal introduction timing, but not optimal payment terms. Interestingly, our results suggest that, in spite of the clear benefits, many buyers might be well-advised to postpone their SCF implementations.}, journal={International Journal of Production Economics}, publisher={Elsevier BV}, author={Wuttke, David A. and Blome, Constantin and Sebastian Heese, H. and Protopappa-Sieke, Margarita}, year={2016}, month={Aug}, pages={72–81} }
 @article{pun_heese_2015, title={A note on budget allocation for market research and advertising}, volume={166}, ISSN={0925-5273}, url={http://dx.doi.org/10.1016/j.ijpe.2015.04.013}, DOI={10.1016/j.ijpe.2015.04.013}, abstractNote={Firms that introduce new products often conduct market research to reduce the substantial uncertainty in demand. When a fixed budget is assigned to marketing-oriented activity, investments in market research must be balanced against other advertising expenses. We characterize a firm׳s optimal marketing and production decisions for a new product. The larger a firm׳s production cost, the higher is the cost associated with unsold products. Market research increases the forecast accuracy and thus reduces the risk of overage. As a consequence, one might expect that a firm׳s investment in market research should be higher if it faces higher production costs. Interestingly we find that an increase in the production cost may sometimes lead to a decrease in the optimal investment in market research, even when the marketing budget is not restrictive.}, journal={International Journal of Production Economics}, publisher={Elsevier BV}, author={Pun, Hubert and Heese, H. Sebastian}, year={2015}, month={Aug}, pages={85–89} }
 @article{aydin_heese_2015, title={Bargaining for an Assortment}, volume={61}, ISSN={0025-1909 1526-5501}, url={http://dx.doi.org/10.1287/mnsc.2013.1854}, DOI={10.1287/mnsc.2013.1854}, abstractNote={ A retailer’s assortment decision results from a process of give-and-take, during which the retailer may bid manufacturers against one another, and the terms of trade offer plenty of flexibility for allocating the profit among the retailer and manufacturers. We adopt a bargaining framework to capture such an assortment selection process. We investigate the properties of the profit allocations that could emerge in a decentralized supply chain. In our model, the retailer engages in simultaneous bilateral negotiations with all manufacturers. Our model and analysis produce managerial insights that could not be obtained in the absence of a bargaining perspective on assortment planning. For example, we find that when a manufacturer improves its product, such improvements not only benefit the retailer but might even benefit competing manufacturers. In fact, even improvements to out-of-assortment products can increase the profits of the retailer and certain in-assortment manufacturers. Hence, our results suggest that a manufacturer can benefit from collaborating with judiciously chosen competitors. }, number={3}, journal={Management Science}, publisher={Institute for Operations Research and the Management Sciences (INFORMS)}, author={Aydin, Goker and Heese, H. Sebastian}, year={2015}, month={Mar}, pages={542–559} }
 @article{heese_2015, title={Single versus multiple sourcing and the evolution of bargaining positions}, volume={54}, ISSN={0305-0483}, url={http://dx.doi.org/10.1016/j.omega.2015.01.016}, DOI={10.1016/j.omega.2015.01.016}, abstractNote={The size and importance of global contract manufacturers has risen along with the volume and pervasiveness of global subcontracting activities. Many contract manufacturers now equal or even dominate their customers in size and power, ending the historical dominance of original equipment manufacturers in subcontracting relations. We study a manufacturer׳s (or buyer׳s) single-versus-multiple sourcing decision under specific consideration of the effects on the evolution of power between the buyer and its supply base. Motivated by the trend towards less hierarchical sourcing relationships, we use the generalized Nash bargaining framework to model contract negotiations. Being awarded a contract allows suppliers to progress on their learning curves, leading to lower future production costs. The buyer׳s primary trade-off between single and multiple sourcing then is as follows. Whereas single sourcing leads to more pronounced learning effects and thus more drastic cost reductions, it increases the active supplier׳s relative bargaining position, as the buyer׳s outside option becomes comparatively less competitive. Considering this trade-off, we find that the buyer׳s optimal sourcing strategy depends on both its bargaining capabilities and the rate at which learning by doing reduces production costs. A powerful buyer might indeed prefer single sourcing, but weaker buyers will generally be better off splitting their volume between different suppliers to maintain a viable alternative source. While splitting the volume maximizes a weak buying firm׳s profit, it always leads to inefficiencies, since the highest possible system profit would be achieved by concentrating learning effects at one supplier (single sourcing).}, journal={Omega}, publisher={Elsevier BV}, author={Heese, H. Sebastian}, year={2015}, month={Jul}, pages={125–133} }
 @article{pun_heese_2014, title={Controlling a supplier’s subcontracting decisions through contractual enforcement or economic incentives}, volume={53}, ISSN={0020-7543 1366-588X}, url={http://dx.doi.org/10.1080/00207543.2014.939242}, DOI={10.1080/00207543.2014.939242}, abstractNote={Suppliers often subcontract part of their workload to other suppliers, and manufacturers might suffer severe consequences if they do not anticipate their suppliers’ incentives to subcontract. In this paper, we study the case where a manufacturer outsources two tasks to a top-tier supplier. The manufacturer must decide whether it should design a contract that enforces that the different tasks are completed by the appropriate suppliers, and when it is preferable to use economic incentives to manipulate the top-tier supplier’s subcontracting behaviour. We find that when the cost difference between suppliers of different tiers is small and the correlation between the risks associated with the two tasks is minimal, the manufacturer can benefit from designing a contract that ensures the preferred subcontracting behaviour, if the cost of enforcing such a contract is not too high. However, when such enforcement cost is substantial, the manufacturer might be better off manipulating the top-tier supplier’s economic incentives.}, number={1}, journal={International Journal of Production Research}, publisher={Informa UK Limited}, author={Pun, Hubert and Heese, H. Sebastian}, year={2014}, month={Jul}, pages={127–140} }
 @article{zhou_blocher_hu_heese_2014, title={Optimal single machine scheduling of products with components and changeover cost}, volume={233}, DOI={10.1016/j.ejor.2013.08.016}, abstractNote={Abstract We consider the problem of scheduling products with components on a single machine, where changeovers incur fixed costs. The objective is to minimize the weighted sum of total flow time and changeover cost. We provide properties of optimal solutions and develop an explicit characterization of optimal sequences, while showing that this characterization has recurrent properties. Our structural results have interesting implications for practitioners, primarily that the structure of optimal sequences is robust to changes in demand.}, number={1}, journal={European Journal of Operational Research}, author={Zhou, F. and Blocher, D. and Hu, X. and Heese, H.S.}, year={2014}, month={Feb}, pages={75–83} }
 @article{pun_heese_2014, title={Outsourcing to suppliers with unknown capabilities}, volume={234}, ISSN={0377-2217}, url={http://dx.doi.org/10.1016/j.ejor.2013.10.068}, DOI={10.1016/j.ejor.2013.10.068}, abstractNote={We investigate the make-buy decision of a manufacturer who does not know its potential suppliers’ capabilities. In order to mitigate the consequences of this limited knowledge, the manufacturer can either perform in-house or audit suppliers. An audit reveals the audited supplier’s capability such that the manufacturer can base the make-buy decision on the audit outcome; the manufacturer might also learn from the audit and update its beliefs about the capabilities of the unaudited suppliers. Interestingly, using a very general model we find that the manufacturer’s decision can be independent of both the number of available suppliers and of the mechanism it uses to update its beliefs after an audit. We illustrate our general model by considering a possible application, where a manufacturer is making the outsource-audit decisions when the suppliers are more cost effective. However, when outsourcing to supplier, the manufacturer would face the uncertainty of whether or not the delivered task can integrate well with the other parts of the project.}, number={1}, journal={European Journal of Operational Research}, publisher={Elsevier BV}, author={Pun, Hubert and Heese, Sebastian}, year={2014}, month={Apr}, pages={108–118} }
 @article{heese_kemahlioglu-ziya_2013, title={Enabling Opportunism: Revenue Sharing when Sales Revenues are Unobservable}, volume={23}, ISSN={1059-1478}, url={http://dx.doi.org/10.1111/poms.12163}, DOI={10.1111/poms.12163}, abstractNote={ We consider a supply chain with a supplier that sells to a retailer under a revenue‐sharing arrangement. Demand is uncertain and unobservable to the supplier. We assume that the retailer is rational, that is, the retailer behaves opportunistically and underreports sales revenues to the supplier whenever such underreporting is profitable. Assuming the supplier has the ability to audit the retailer and learn about the actual sales revenues, we show that the supplier will never find it optimal to audit to the point that ensures truthful reporting for all demand realizations. By committing to an auditing policy, the supplier can exploit retailer opportunism and derive profits that at times even exceed those that could be obtained when dealing with a retailer that always strictly adheres to the agreed‐upon contract terms. We also show that the retailer's opportunistic behavior can increase total supply chain profits. }, number={9}, journal={Production and Operations Management}, publisher={Wiley}, author={Heese, H. Sebastian and Kemahlioglu-Ziya, Eda}, year={2013}, month={Nov}, pages={1634–1645} }
 @article{heese_2012, title={Retail Strategies for Extended Warranty Sales and Impact on Manufacturer Base Warranties}, volume={43}, ISSN={0011-7315}, url={http://dx.doi.org/10.1111/j.1540-5915.2011.00348.x}, DOI={10.1111/j.1540-5915.2011.00348.x}, abstractNote={ABSTRACT}, number={2}, journal={Decision Sciences}, publisher={Wiley}, author={Heese, H. Sebastian}, year={2012}, month={Feb}, pages={341–367} }
 @article{gilland_heese_2012, title={Sequence Matters: Shelf-Space Allocation under Dynamic Customer-Driven Substitution}, volume={22}, ISSN={1059-1478}, url={http://dx.doi.org/10.1111/j.1937-5956.2012.01389.x}, DOI={10.1111/j.1937-5956.2012.01389.x}, abstractNote={ Customers who face a stockout situation often decide to purchase a different product in the same category. We analyze the resulting dynamic substitution problem in a retail environment, where customers serve themselves from the store shelves, such that the sequence of customer arrivals affects how scarce products are allocated to customers. We consider a setting with constrained shelf space, and we study how a retailer should optimally allocate such space between substitute products. We characterize environments where the sequence of customer arrivals can have a substantial impact on profitability. }, number={4}, journal={Production and Operations Management}, publisher={Wiley}, author={Gilland, Wendell G. and Heese, H. Sebastian}, year={2012}, month={Oct}, pages={875–887} }
 @article{bretthauer_heese_pun_coe_2011, title={Blocking in Healthcare Operations: A New Heuristic and an Application}, volume={20}, ISSN={1059-1478}, url={http://dx.doi.org/10.1111/j.1937-5956.2011.01230.x}, DOI={10.1111/j.1937-5956.2011.01230.x}, abstractNote={ We consider the problem of optimal capacity allocation in a hospital setting, where patients pass through a set of units, for example intensive care and acute care (AC), or AC and post‐acute care. If the second stage is full, a patient whose service at the first stage is complete is blocked and cannot leave the first stage. We develop a new heuristic for tandem systems to efficiently evaluate the effects of such blocking on system performance and we demonstrate that this heuristic performs well when compared with exact solutions and other approaches presented in the literature. In addition, we show how our tandem heuristic can be used as a building block to model more complex multi‐stage hospital systems with arbitrary patient routing, and we derive insights and actionable capacity strategies for a real hospital system where such blocking occurs between units. }, number={3}, journal={Production and Operations Management}, publisher={Wiley}, author={Bretthauer, Kurt M. and Heese, H. Sebastian and Pun, Hubert and Coe, Edwin}, year={2011}, month={Feb}, pages={375–391} }
 @inbook{heese_2011, title={Inventory Record Inaccuracy, RFID Technology Adoption and Supply Chain Coordination}, ISBN={9783642192562 9783642192579}, url={http://dx.doi.org/10.1007/978-3-642-19257-9_19}, DOI={10.1007/978-3-642-19257-9_19}, booktitle={Supply Chain Coordination under Uncertainty}, publisher={Springer Berlin Heidelberg}, author={Heese, H. Sebastian}, year={2011}, pages={483–503} }
 @article{heese_2010, title={Competing with channel partners: Supply chain conflict when retailers introduce store brands}, volume={57}, ISSN={0894-069X 1520-6750}, url={http://dx.doi.org/10.1002/nav.20412}, DOI={10.1002/nav.20412}, abstractNote={Abstract}, number={5}, journal={Naval Research Logistics}, publisher={Wiley}, author={Heese, Hans Sebastian}, year={2010}, pages={441–459} }
 @article{heese_swaminathan_2010, title={Inventory and sales effort management under unobservable lost sales}, volume={207}, ISSN={0377-2217}, url={http://dx.doi.org/10.1016/j.ejor.2010.06.016}, DOI={10.1016/j.ejor.2010.06.016}, abstractNote={A retailer needs to make decisions regarding how much to order and how much sales effort to exert in an environment with uncertain demand. One intrinsic complexity in a typical retail environment is caused by the fact that the retailer can obtain information about demand only based on sales, as demand itself is unobservable. Taking a Bayesian approach, Lariviere and Porteus (1999) show that in such a setting a retailer should stock more to increase the probability of an exact demand observation. In this article, we extend their work by allowing the retailer to control both the stocking quantity and sales effort, which can be used to affect demand. We show that their insights with respect to information stalking carry over to this setting. In addition, our model allows gaining a better understanding of optimal sales effort strategies. We find that demand management has a dual role in supporting information gathering: while at the beginning of a product life cycle it is optimal to support learning effects by sharply reducing sales effort, at later stages of the product life cycle an aggressive strategy of increased promotional activities can be used to harvest the information gathered in earlier periods.}, number={3}, journal={European Journal of Operational Research}, publisher={Elsevier BV}, author={Heese, H. Sebastian and Swaminathan, Jayashankar M.}, year={2010}, month={Dec}, pages={1263–1268} }
 @article{groznik_heese_2010, title={Supply Chain Conflict Due to Store Brands: The Value of Wholesale Price Commitment in a Retail Supply Chain*}, volume={41}, ISSN={0011-7315 1540-5915}, url={http://dx.doi.org/10.1111/j.1540-5915.2010.00265.x}, DOI={10.1111/j.1540-5915.2010.00265.x}, abstractNote={ABSTRACT}, number={2}, journal={Decision Sciences}, publisher={Wiley}, author={Groznik, Ana and Heese, H. Sebastian}, year={2010}, month={May}, pages={203–230} }
 @article{groznik_heese_2010, title={Supply chain interactions due to store-brand introductions: The impact of retail competition}, volume={203}, ISSN={0377-2217}, url={http://dx.doi.org/10.1016/j.ejor.2009.08.014}, DOI={10.1016/j.ejor.2009.08.014}, abstractNote={Store-brand products are of increasing importance in retailing, often causing channel conflict as they compete with national brands. Focusing on the interactions that arise in single-manufacturer single-retailer settings, previous research suggests that one main driver of store-brand profitability to the retailer is that it leads to a reduction of the national-brand wholesale price. Under retail competition, the Robinson Patman Act then introduces an interesting trade-off: A retailer that introduces a store brand incurs the associated costs and risks, while sharing this benefit with its competition. We show that the resulting interactions can cause retailers to play “chicken”, either of them preferring a store-brand introduction by the competitor. Such interactions do not arise in channels with a single retailer, as has been the object of most previous research, and we show that some of the key insights derived from single-retailer models fail to hold when retailers compete. We conduct a numeric study, and our findings suggest that retailers are more likely to randomize their store-brand introduction strategies when customers have strong store preferences, and when the retailers’ store-brand products are similar to the national-brand product in terms of customer valuations and production cost.}, number={3}, journal={European Journal of Operational Research}, publisher={Elsevier BV}, author={Groznik, Ana and Heese, H. Sebastian}, year={2010}, month={Jun}, pages={575–582} }
 @article{pun_heese_2010, title={The value of losing control: Competition in markets for complements}, volume={57}, ISSN={0894-069X 1520-6750}, url={http://dx.doi.org/10.1002/nav.20397}, DOI={10.1002/nav.20397}, abstractNote={Abstract}, number={2}, journal={Naval Research Logistics}, publisher={Wiley}, author={Pun, Hubert and Heese, H. Sebastian}, year={2010}, pages={188–210} }
 @article{heese_2009, title={Inventory Record Inaccuracy, Double Marginalization, and RFID Adoption}, volume={16}, ISSN={1059-1478}, url={http://dx.doi.org/10.1111/j.1937-5956.2007.tb00279.x}, DOI={10.1111/j.1937-5956.2007.tb00279.x}, abstractNote={ Most retailers suffer from substantial discrepancies between inventory quantities recorded in the system and stocks truly available to customers. Promising full inventory transparency, radio frequency identification (RFID) technology has often been suggested as a remedy to the problem. We consider inventory record inaccuracy in a supply chain model, where a Stackelberg manufacturer sets the wholesale price and a retailer determines how much to stock for sale to customers. We first analyze the impact of inventory record inaccuracy on optimal stocking decisions and profits. By contrasting optimal decisions in a decentralized supply chain with those in an integrated supply chain, we find that inventory record inaccuracy exacerbates the inefficiencies resulting from double marginalization in decentralized supply chains. Assuming RFID technology can eliminate the problem of inventory record inaccuracy, we determine the cost thresholds at which RFID adoption becomes profitable. We show that a decentralized supply chain benefits more from RFID technology, such that RFID adoption improves supply chain coordination. }, number={5}, journal={Production and Operations Management}, publisher={Wiley}, author={Heese, H. Sebastian}, year={2009}, month={Jan}, pages={542–553} }
 @article{cattani_heese_2009, title={Seeking Closure: Competition in Complementary Markets}, volume={40}, ISSN={0011-7315 1540-5915}, url={http://dx.doi.org/10.1111/j.1540-5915.2009.00252.x}, DOI={10.1111/j.1540-5915.2009.00252.x}, abstractNote={ABSTRACT}, number={4}, journal={Decision Sciences}, publisher={Wiley}, author={Cattani, Kyle and Heese, Hans Sebastian}, year={2009}, month={Nov}, pages={817–843} }
 @article{tiwari_heese_2009, title={Specialization and competition in healthcare delivery networks}, volume={12}, ISSN={1386-9620 1572-9389}, url={http://dx.doi.org/10.1007/s10729-008-9096-1}, DOI={10.1007/s10729-008-9096-1}, abstractNote={Hospital networks, which offer multiple services at multiple locations, are investigating strategies to fight the growing competition from specialty hospitals. Specialty hospitals focus on a selective range of profitable services, have better control over costs, and deliver higher (perceived) quality. A hospital network too can create specialized facilities; however, this may lead to the loss of sales from services that it no longer offers. Using a spatial model, we study when it is profitable for the network to specialize, and how to determine which facilities provide the greatest value through specialization. We find that a hospital network, when facing specialized competitors, can often improve its overall profitability by specializing some of its facilities; and that among its different facilities, the network's best choice for specialization is the facility that is closest to the competitor, and thus most directly affected. Interestingly, we find that the value of specialization is contingent upon the competitive pressure that the specialized competitor exerts on the network. Specializing one facility yields the greatest benefits for the network when the competitor is located at the fringe of the market, thus presenting a reduced threat to the hospital network. On the other hand, if the specialized competitor is located at the core of the network's customer base, we find that the attractiveness of specializing one facility is much smaller and that the hospital network might fare better with a strategy based on diversification, i.e., offering a full-menu of services at every facility.}, number={3}, journal={Health Care Management Science}, publisher={Springer Science and Business Media LLC}, author={Tiwari, Vikram and Heese, H. Sebastian}, year={2009}, month={Feb}, pages={306–324} }
 @article{cattani_gilland_heese_swaminathan_2006, title={Boiling frogs: pricing strategies for a manufacturer adding a direct channel that competes with the traditional channel}, volume={15}, DOI={10.1111/j.1937-5956.2006.tb00002.x}, abstractNote={ We analyze a scenario where a manufacturer with a traditional channel partner opens up a direct channel in competition with the traditional channel. We first consider that in order to mitigate channel conflict the manufacturer, who chooses wholesale prices as a Stackelberg leader, commits to setting a direct channel retail price that matches the retailer's price in the traditional channel. We find that the specific equal‐pricing strategy that optimizes profits for the manufacturer is also preferred by the retailer and customers over other equal‐pricing strategies. We next consider the implications of the equal‐pricing constraint through a numerical experiment that indicates that the equal‐pricing strategy is appropriate as long as the Internet channel is significantly less convenient than the traditional channel. If the Internet channel is of comparable convenience to the traditional channel, then the manufacturer has tremendous incentive to abandon the equal‐pricing policy, at great peril to the traditional retailer. }, number={1}, journal={Production and Operations Management}, author={Cattani, K. and Gilland, W. and Heese, H.S. and Swaminathan, J.M.}, year={2006}, pages={40–56} }
 @article{heese_swaminathan_2006, title={Product Line Design with Component Commonality and Cost-Reduction Effort}, volume={8}, ISSN={1523-4614 1526-5498}, url={http://dx.doi.org/10.1287/msom.1060.0103}, DOI={10.1287/msom.1060.0103}, abstractNote={ Market pressure for low prices paired with customer demand for high product variety presents a considerable dilemma for many manufacturers. Industry practice and research to date suggest that approaches based on component commonality can substantially lower the costs of proliferated product lines, but at the cost of reducing product differentiation and revenues. We analyze a stylized model of a manufacturer who designs a product line consisting of two products for sale to two market segments with different valuations of quality. The manufacturer determines the component quality levels, the amount of effort to reduce production costs, and whether to use common or different components for the two products. }, number={2}, journal={Manufacturing & Service Operations Management}, publisher={Institute for Operations Research and the Management Sciences (INFORMS)}, author={Heese, Hans Sebastian and Swaminathan, Jayashankar M.}, year={2006}, month={Apr}, pages={206–219} }
 @article{cattani_gilland_heese_swaminathan_2006, title={When manufacturers go retail: whether a manufacturer’s direct sales via the Internet help or hurt its retail partners depends upon the pricing strategy it employs}, volume={47}, number={2}, journal={MIT Sloan Management Review}, author={Cattani, K. and Gilland, W. and Heese, H.S. and Swaminathan, J.M.}, year={2006}, pages={9} }
 @article{heese_cattani_ferrer_gilland_roth_2005, title={Competitive advantage through take-back of used products}, volume={164}, ISSN={0377-2217}, url={http://dx.doi.org/10.1016/j.ejor.2003.11.008}, DOI={10.1016/j.ejor.2003.11.008}, abstractNote={Motivated by a recent antitrust ruling against Hill–Rom, one of the two dominant American suppliers of hospital beds, we develop a stylized model to investigate the consequences of used product take-back on firms, industry and customers. Our findings suggest that by taking back and reselling refurbished products, a manufacturer can increase both profit margins and sales––to the detriment of a non-interfering competitor. In our model, customers are always better off under product take-back, but it depends on the degree of competition, whether firms use the benefits of take-back primarily to increase their margins or to pass them on to the customers by lowering their prices. The first firm to offer take-back, in some cases, can deter its competitors from following this profitable strategy, especially if it has an existing advantage in terms of lower production cost or higher market share. Contrary to the claim of Hill–Rom's competitor, we find a “legitimate business justification” for Hill–Rom's reduction of new product prices.}, number={1}, journal={European Journal of Operational Research}, publisher={Elsevier BV}, author={Heese, Hans S. and Cattani, Kyle and Ferrer, Geraldo and Gilland, Wendell and Roth, Aleda V.}, year={2005}, month={Jul}, pages={143–157} }