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Scheller College of Business

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https://hdl.handle.net/1853/70690

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Office of the Provost and Executive Vice President for Academic Affairs

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Institute for Leadership and Social Impact

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https://finding-aids.library.gatech.edu/agents/corporate_entities/255

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Publication Search Results

Now showing 1 - 10 of 51

Relicensing as a Secondary Market Strategy

( 2008-01-11) Ferguson, Mark E. ; Oraiopoulos, Nektarios ; Toktay, L. Beril

Secondary markets in the Information Technology (IT) industry, where used or refurbished equipment is traded, have been growing steadily. For Original Equipment Manufacturers (OEMs) in this industry, the importance of secondary markets has grown in parallel, not only as a source of revenue, but also because of their impact on these firms' competitive advantage and market strategy. Recent articles in the press have severely criticized some OEMs who are perceived to be actively trying to eliminate the secondary market for their products. Others have policies that enhance their secondary markets. The goal of this paper is to understand how an OEM's incentives and optimal strategies vis-a-vis the secondary market are shaped contingent on her relative competitive advantage, product characteristics and consumer preferences. The critical tradeoff that we examine is whether the indirect benefit from maintaining an active secondary market (the resale value effect) can outweigh the potentially negative e®ect of the sales of used products at the expense of new product sales (the cannibalization effect). To that end, we develop a model where the OEM can directly a®ect the resale value of her product through a relicensing fee charged to the buyer of the refurbished equipment. Moreover, we introduce a measure of the consumers' willingness to return their used products to account for the fact that the higher the price offered by a third-party entrant, the higher the ratio of returned products at their end-of-use. We analyze the OEM's decision in both the monopoly and the duopoly cases, characterize the optimal relicensing fee set by the OEM, and draw conclusions on the conditions that favor stimulating or deterring the secondary market.
Multi-Period Remanufacturing Planning With Uncertain Quality of Inputs

( 2008-01-11) Ferguson, Mark E. ; Denizel, Meltem ; Souza, Gilvan C.

In this paper we consider production planning of remanufactured products when inputs have different and uncertain quality levels, and there are capacity constraints. This situation is typical of most remanufacturing environments, where inputs are product returns (also called cores). Production (remanufacturing) cost increases as the quality level decreases, and any unused cores may be salvaged at a value that increases with their quality level. Decision variables include, for each period and under a certain probabilistic scenario, the amount of cores to grade, the amount to remanufacture for each quality level and the amount of inventory to carry over for future periods for un-graded cores, graded cores, and finished remanufactured products. Our model is grounded with data collected at a major OEM that also remanufactures. We formulate the problem as a stochastic program, and illustrate how the deterministic version of the problem yields solutions that cannot be implemented in practice. The stochastic program, although a large linear program, can be solved easily using Cplex. We provide a numeric study to generate insights into the nature of the solution.
Bid-Response Models for Customized Pricing (Ed. 2)

( 2008-01-11) Ferguson, Mark E. ; Agrawal, Vishal

In this paper, we study pricing situations where a firm provides a price quote in the presence of uncertainty in the preferences of the buyer and the competitive landscape. We introduce two customized-pricing bid-response models used in practice, which can be developed from the historical information available to the firm based on previous bidding opportunities. We show how these models may be used to exploit the differences in the market segments to generate optimal price quotes given the characteristics of the current bid opportunity. We also describe the process of evaluating competing models using an industry dataset as a test bed to measure the model fit. Finally, we test the models on the industry dataset to compare their performance and estimate the percent improvement in expected profits that may be possible from their use.
The "Killer Application" of Revenue Management: Harrah’s Cherokee Casino & Hotel (ed. 2)

( 2008-01-11) Ferguson, Mark E. ; Metters, Richard ; Crystal, Carolyn Roberts

Harrah’s Cherokee Casino and Hotel is an extreme and unusual example of revenue management techniques. Typical revenue management installations yield revenue enhancements of 3-7%. Harrah’s, chainwide, has seen 15% improvements, with Harrah’s Cherokee Casino and Hotel perhaps the most excessive beneficiary, despite serving no alcohol and having no traditional table games. Further, many traditional revenue management techniques are turned on their heads: For example, pricing decisions and customer segmentation rules are different for casinos than in virtually any other revenue management application.
Revenue Management and the Analytics Explosion: Perspectives from Industry Experts

(Georgia Institute of Technology, 2008-01-11) Ferguson, Mark E. ; Garrow, Laurie A.

On October 2-3, 2007, the third annual Revenue Management and Price Optimization conference was held at the Georgia Institute of Technology. The conference explored how multiple factors, including fragmentation of customer markets, transparency in markets, and globalization have spurred a transformation from intuition-based to analytical-based decision making across many industries. Panelists included representatives from industries spanning airline, hotel, gaming, grocery, jewelry, package delivery, consumer goods, manufacturing, and consulting. This paper summarizes key discussions that emerged from the conference and highlights success stories portrayed in keynote addresses given by James Whitehurst, former chief operating office of Delta Air Lines; Rick Campana, Vice President of Corporate Marketing of the United Parcel Service; and, Chuck Neville, Executive Director of Finance of General Motors Service and Parts Operations.
Appendix to "Managing Slow Moving Perishables in the Grocery Industry" (ed.3)

( 2007-05-02) Ferguson, Mark E. ; Ketzenberg, Michael E.

An on-line appendix to "Managing Slow Moving Perishables in the Grocery Industry" by Michael E. Ketzenberg and Mark E. Ferguson
Appendix to "Managing Slow Moving Perishables in the Grocery Industry" (ed.2)

( 2007-05-01) Ferguson, Mark E. ; Ketzenberg, Michael E.

An on-line appendix to "Managing Slow Moving Perishables in the Grocery Industry" by Michael E. Ketzenberg and Mark E. Ferguson
A Comparison of Unconstraining Methods to Improve Revenue Management Systems (ed.3)

(Georgia Institute of Technology, 2007-02-16) Ferguson, Mark E. ; Crystal, Carolyn Roberts ; Higbie, Jon ; Kapoor, Rohit

A successful revenue management system requires accurate demand forecasts for each customer segment. The forecasts are used to set booking limits for lower value customers to ensure an adequate supply for higher value customers. The very use of booking limits, however, constrains the historical demand data needed for an accurate forecast. Ignoring this interaction leads to substantial penalties in a firm's potential revenues. We review existing unconstraining methods and propose a new method that includes some attractive properties not found in the existing methods. We evaluate several of the common unconstraining methods against our proposed method by testing them on intentionally constrained simulated data. Results show our proposed method outperform other methods in two out of three data sets. We also test the revenue impact of our proposed method, EM, and "no unconstraining" actual booking data from a hotel/casino. We show that performance varies with the initial starting protection limits and a lack of unconstraining leads to significant revenue losses.
Appendix to "Relicensing Fees as a Secondary Market Strategy"

( 2007-02-16) Ferguson, Mark E. ; Oraiopoulos, Nektarios ; Toktay, L. Beril

Appendix to "Relicensing Fees as a Secondary Market Strategy"
Managing Slow Moving Perishables in the Grocery Industry

( 2007-02-14) Ferguson, Mark E. ; Ketzenberg, Michael E.

We address the value of information (VOI) and value of centralized control (VCC) in the context of a two–echelon, serial supply chain with one retailer and one supplier that provides a single perishable product to consumers. Our analysis is relevant for managing slow moving perishable products with fixed lot sizes and expiration dates of a week or less. We evaluate two supply chain structures. In the first structure, referred to as Decentralized Information Sharing, the retailer shares its demand, inventory, and ordering policy with the supplier, yet both facilities make their own profit-maximizing replenishment decisions. In the second structure, referred to as Centralized Control, incentives are aligned and the replenishment decisions are coordinated. The latter supply chain structure corresponds to the industry practices of company owned stores or vendor–managed inventory. We measure the VOI and VCC as the marginal improvement in expected profits that a supply chain achieves relative to the case when no information is shared and decision making is decentralized. Key assumptions of our model include stochastic demand, lost sales, and fixed order quantities. We establish the importance of information sharing and centralized control in the supply chain and identify conditions under which benefits are realized. As opposed to previous work on the VOI, the major benefit in our setting is driven by the supplier’s ability to provide the retailer with fresher product. By isolating the benefit by firm, we show that sharing information is not always Pareto improving for both supply chain partners in the decentralized setting.