UNDERSTANDING CUSTOMER CHOICES IN SERVICE OUTSOURCING AND REVENUE MANAGEMENT

This dissertation investigates customer behavior modeling in service outsourcing and revenue management in the service sector (i.e., airline and hotel industries). In particular, it focuses on a common theme of improving firms’ strategic decisions through the understanding of customer preferences. Decisions concerning degrees of outsourcing, such as firms’ capacity choices, are important to performance outcomes. These choices are especially important in high-customer-contact services (e.g., airline industry) because of the characteristics of services: simultaneity of consumption and production, and intangibility and perishability of the offering. Essay 1 estimates how outsourcing affects customer choices and market share in the airline industry, and consequently the revenue implications from outsourcing. However, outsourcing decisions are typically endogenous. A firm may choose whether to outsource or not based on what a firm expects to be the best outcome. Essay 2 contributes to the literature by proposing a structural model which could capture a firm’s profit-maximizing decision-making behavior in a market. This makes possible the prediction of consequences (i.e., performance outcomes) of future strategic moves. Another emerging area in service operations management is revenue management. Choice-based revenue systems incorporate discrete choice models into traditional revenue management algorithms. To successfully implement a choice-based revenue system, it is necessary to estimate customer preferences as a valid input to optimization algorithms. The third essay investigates how to estimate customer preferences when part of the market is consistently unobserved. This issue is especially prominent in choice-based revenue management systems. Normally a firm only has its own observed purchases, while those customers who purchase from competitors or do not make purchases are unobserved. Most current estimation procedures depend on unrealistic assumptions about customer arriving. This study proposes a new estimation methodology, which does not require any prior knowledge about the customer arrival process and allows for arbitrary demand distributions. Compared with previous methods, this model performs superior when the true demand is highly variable.

Plant Migrations Impact on Potential Vegetation and Carbon Redistribution in Northern North America from Climate Change

Forests have a prominent role in carbon storage and sequestration. Anthropogenic forcing has the potential to accelerate climate change and alter the distribution of forests. How forests redistribute spatially and temporally in response to climate change can alter their carbon sequestration potential. The driving question for this research was: How does plant migration from climate change impact vegetation distribution and carbon sequestration potential over continental scales? Large-scale simulation of the equilibrium response of vegetation and carbon from future climate change has shown relatively modest net gains in sequestration potential, but studies of the transient response has been limited to the sub-continent or landscape scale. The transient response depends on fine scale processes such as competition, disturbance, landscape characteristics, dispersal, and other factors, which makes it computational prohibitive at large domain sizes. To address this, this research used an advanced mechanistic model (Ecosystem Demography Model, ED) that is individually based, but pseudo-spatial, that reduces computational intensity while maintaining the fine scale processes that drive the transient response. First, the model was validated against remote sensing data for current plant functional type distribution in northern North America with a current climatology, and then a future climatology was used to predict the potential equilibrium redistribution of vegetation and carbon from future climate change. Next, to enable transient calculations, a method was developed to simulate the spatially explicit process of dispersal in pseudo-spatial modeling frameworks. Finally, the new dispersal sub-model was implemented in the mechanistic ecosystem model, and a model experimental design was designed and completed to estimate the transient response of vegetation and carbon to climate change. The potential equilibrium forest response to future climate change was found to be large, with large gross changes in distribution of plant functional types and comparatively smaller changes in net carbon sequestration potential for the region. However, the transient response was found to be on the order of centuries, and to depend strongly on disturbance rates and dispersal distances. Future work should explore the impact of species-specific disturbance and dispersal rates, landscape fragmentation, and other processes that influence migration rates and have been simulated at the sub-continent scale, but now at continental scales, and explore a range of alternative future climate scenarios as they continue to be developed.