Ordering Flexibility, Delay Information Heterogeneity, and Time-of-Service Preferences in Operations Management

Ordering Flexibility, Delay Information Heterogeneity, and Time-of-Service Preferences in Operations Management Yang Li Doctor of Philosophy Graduate Department of Rotman School of Management University of Toronto 2016 This thesis studies three problems in operations management related to the reorder flexibility in supply chain management and operation strategies in service industry. In Chapter 2, I investigate the value of reorder flexibility under price competition. Although the supply chain literature shows that reorder flexibility increases profits even under quality competition, I show that price competition, arguably a more appropriate price formation model in the presence of reorder flexibility, may yield opposite results: (i) Reorder flexibility may increase competing firms’ initial orders. (ii) Reorder flexibility hurts profits except if it reduces initial orders and in addition, demand variability is moderate, reordering is sufficiently inexpensive, and products are sufficiently differentiated. (iii) Firms can avoid the downside of reorder flexibility only in some cases where it hurts profits. In others, firms are trapped in a prisoner’s dilemma, whereby reorder flexibility is the dominant strategy even though it hurts their profits. In Chapter 3, I study how the growing prevalence of real-time delay information affects service system performances, i.e., throughput and social welfare. I consider an M/M/1 system with two streams of customers, one informed about real-time delay and one uninformed. I show that the impacts of growing information prevalence on system performance measures are determined by the equilibrium joining behavior of uninformed customers. Moreover, throughput and social welfare can be unimodal in the fraction of informed customers. In other words, some amount of information heterogeneity in the population can lead to strictly more efficient outcomes than information homogeneity,