Conference Agenda

Ensuring that products are repairable and durable have become increasingly important topics in legislation, with the objective of reducing waste and promoting a circular economy. However, to assess the effectiveness of such measures and laws on repair demand, it is crucial to first understand how individuals make repair versus replacement decisions and to further identify to what extent increased product repairability and durability can impact those decisions. To that end, we conducted an incentivized laboratory experiment where participants were asked to make sequential repair versus replacement decisions given repair and replacement costs, product age, and the product’s failure probability. To determine the effectiveness of the participants’ decisions, we compared them to the optimal (expected discounted-profit maximizing) repair versus replacement decision based on a Markov decision process model from the machine replacement literature. We find that about 70% of all decisions in the experiment are optimal and only a minority of subjects never choose to repair, suggesting that strictly from a financial standpoint, individuals are often aware of the optimal decision, which could mean to repair more often. To include the perspective of a product’s repairability and durability, one treatment in the experiment considered a product with lower repair costs (more repairable), and another treatment included a product with a lower growth rate of its failure probability (more durable).

Although considerable attention has been separately given to factors such as power structures, price-dependent demand, and markup pricing schemes, there has been limited exploration of the combined effects of these factors on supply chain efficiency and the leader's advantage. We propose a game theoretic model in which a manufacturer sells a single product to a newsvendor retailer who sets both optimal order quantity and selling price under uncertain price-dependent demand. Furthermore, we examine a supply network wherein a single retailer fulfills orders using a global manufacturer for regular orders and a local manufacturer to clear any shortages. Through numerical analysis, we show that the retailer always prefers to charge a percentage markup. In a two-player game, channel efficiency is higher when the retailer is the leader under linear demand; however, under iso-elastic demand, the manufacturer being a leader brings a higher channel efficiency. When a local manufacturer is involved as a second manufacturer, channel efficiency is higher when the retailer remains a follower, as this induces more fierce wholesale price competition between the two manufacturers. Additionally, when demand uncertainty is high in the two-player game with linear demand, the retailer as a follower can achieve higher profits, whilst high uncertainty under iso-elastic demand decreases both players' profits. Moreover, it becomes advantageous for the retailer to have a local manufacturer as demand uncertainty increases, even when the local manufacturer announces the wholesale price first.

Mobile Applications Supply Chain (MASC) consists of an app developer and a platform owner, where app developer is considered to be closer to customers and is responsible for research and development of the app. The platform owner provides a platform to sell the app and receives a part of the revenue. App development industry has various types of developers with respect to their experience. More experienced developers will incur less cost for the same level of quality or less experienced guys will deliver lower quality for the same cost. Since the quality level of the app and its cost is decided by the developer, it can be private to him only. The developer has the incentive to falsify this information and try to get larger percentage of revenue while delivering lower quality levels. The profit of the platform owner will go down in this situation. We propose a menu of contracts for app developer to reveal his cost information truthfully by incentivizing him. Moreover, we have proposed a two part tariff contract for the MASC. The contract is such that the app developer will get the revenue share only after the app demand crosses a certain level of demand, till then he gets a fixed amount. In comparison to revenue sharing contract it performs better.

We consider a multi-agent decision situation when cooperation is possible, but constrained by a hierarchy of the agents. Moreover, having access to a "crucial resource" is necessary for being able to materialize the potential profit-making capabilities of the agents. Making this resource, capable of serving any subgroup of the agents, available has a fixed investment cost. Utilization of the resource is hierarchical, represented by a rooted tree graph. The root represents the resource, each other node of the tree represents one of the agents with a given profit-making potential that can only materialize if all agents on the path to the root are also participating.

We study fair and stable allocations in such ”hierarchical joint venture” situations determined by solutions of associated cooperative games. We define the value of a coalition of agents as the sum of the individual potential profits of those members who are connected to the root via other members within the coalition minus the fixed (independent of the coalition to be served) investment cost of the "crucial resource". We consider the standard, the per-capita, and the disruption nucleoli, and investigate whether and how these nucleolus-type allocations can be computed directly from the parameters modeling the ”hierarchical joint venture” situation, so there is no need to explicitly generate the exponential-size associated cooperative game and compute its nucleoli with general-purpose algorithms.