Essays in Empirical Operations Management: Bayesian Learning of Service Quality and Structural Estimation of Complementary Product Pricing and Inventory Management

This dissertation contributes to the rapidly growing empirical research area in the field of operations management. It contains two essays, tackling two different sets of operations management questions which are motivated by and built on field data sets from two very different industries --- air cargo logistics and retailing.

The first essay, based on the data set obtained from a world leading third-party logistics company, develops a novel and general Bayesian hierarchical learning framework for estimating customers' spillover learning, that is, customers' learning about the quality of a service (or product) from their previous experiences with similar yet not identical services. We then apply our model to the data set to study how customers' experiences from shipping on a particular route affect their future decisions about shipping not only on that route, but also on other routes serviced by the same logistics company. We find that customers indeed borrow experiences from similar but different services to update their quality beliefs that determine future purchase decisions. Also, service quality beliefs have a significant impact on their future purchasing decisions. Moreover, customers are risk averse; they are averse to not only experience variability but also belief uncertainty (i.e., customer's uncertainty about their beliefs). Finally, belief uncertainty affects customers' utilities more compared to experience variability.

The second essay is based on a data set obtained from a large Chinese supermarket chain, which contains sales as well as both wholesale and retail prices of un-packaged perishable vegetables. Recognizing the special characteristics of this particularly product category, we develop a structural estimation model in a discrete-continuous choice model framework. Building on this framework, we then study an optimization model for joint pricing and inventory management strategies of multiple products, which aims at improving the company's profit from direct sales and at the same time reducing food waste and thus improving social welfare.

Collectively, the studies in this dissertation provide useful modeling ideas, decision tools, insights, and guidance for firms to utilize vast sales and operations data to devise more effective business strategies.

Does higher hospital cost imply higher quality of care?

This study investigates whether higher input use per stay in the hospital (treatment intensity) and longer length of stay improve outcomes of care. We allow for endogeneity of intensity and length of stay by estimating a quasi-maximum-likelihood discrete factor model, where the distribution of the unmeasured variable is modeled using a discrete distribution. Data on elderly persons come from several waves of the National Long-Term Care Survey merged with Medicare claims data for 1984-1995 and the National Death Index. We find that higher intensity improves patient survival and some dimensions of functional status among those who survive.

The impact of shame on health-related quality of life among HIV-positive adults with a history of childhood sexual abuse.

Childhood sexual abuse is prevalent among people living with HIV, and the experience of shame is a common consequence of childhood sexual abuse and HIV infection. This study examined the role of shame in health-related quality of life among HIV-positive adults who have experienced childhood sexual abuse. Data from 247 HIV-infected adults with a history of childhood sexual abuse were analyzed. Hierarchical linear regression was conducted to assess the impact of shame regarding both sexual abuse and HIV infection, while controlling for demographic, clinical, and psychosocial factors. In bivariate analyses, shame regarding sexual abuse and HIV infection were each negatively associated with health-related quality of life and its components (physical well-being, function and global well-being, emotional and social well-being, and cognitive functioning). After controlling for demographic, clinical, and psychosocial factors, HIV-related, but not sexual abuse-related, shame remained a significant predictor of reduced health-related quality of life, explaining up to 10% of the variance in multivariable models for overall health-related quality of life, emotional, function and global, and social well-being and cognitive functioning over and above that of other variables entered into the model. Additionally, HIV symptoms, perceived stress, and perceived availability of social support were associated with health-related quality of life in multivariable models. Shame is an important and modifiable predictor of health-related quality of life in HIV-positive populations, and medical and mental health providers serving HIV-infected populations should be aware of the importance of shame and its impact on the well-being of their patients.

The quantity and quality of worldwide new drug introductions, 1982-2003.

We examined trends in the introduction of new chemical entities (NCEs) worldwide from 1982 through 2003. Although annual introductions of NCEs decreased over time, introductions of high-quality NCEs (that is, global and first-in-class NCEs) increased moderately. Both biotech and orphan products enjoyed tremendous growth, especially for cancer treatment. Country-level analyses for 1993-2003 indicate that U.S. firms overtook their European counterparts in innovative performance or the introduction of first-in-class, biotech, and orphan products. The United States also became the leading market for first launch.

Quality of Life and Neurocognitive Functioning in Children with Sickle Cell Disease: Investigating the Feasibility of a Computerized Cognitive Training Program

Children with sickle cell disease (SCD) have a high risk of neurocognitive impairment. No known research, however, has examined the impact of neurocognitive functioning on quality of life in this pediatric population. In addition, limited research has examined neurocognitive interventions for these children. In light of these gaps, two studies were undertaken to (a) examine the relationship between cognitive functioning and quality of life in a sample of children with SCD and (b) investigate the feasibility and preliminary efficacy of a computerized working memory training program in this population. Forty-five youth (ages 8-16) with SCD and a caregiver were recruited for the first study. Participants completed measures of cognitive ability, quality of life, and psychosocial functioning. Results indicated that cognitive ability significantly predicted child- and parent-reported quality of life among youth with SCD. In turn, a randomized-controlled trial of a computerized working memory program was undertaken. Eighteen youth with SCD and a caregiver enrolled in this study, and were randomized to a waitlist control or the working memory training condition. Data pertaining to cognitive functioning, psychosocial functioning, and disease characteristics were obtained from participants. The results of this study indicated a high degree of acceptance for this intervention but poor feasibility in practice. Factors related to feasibility were identified. Implications and future directions are discussed.

Design of Scheduling Algorithms Using Game Theoretic Ideas

Scheduling a set of jobs over a collection of machines to optimize a certain quality-of-service measure is one of the most important research topics in both computer science theory and practice. In this thesis, we design algorithms that optimize {\em flow-time} (or delay) of jobs for scheduling problems that arise in a wide range of applications. We consider the classical model of unrelated machine scheduling and resolve several long standing open problems; we introduce new models that capture the novel algorithmic challenges in scheduling jobs in data centers or large clusters; we study the effect of selfish behavior in distributed and decentralized environments; we design algorithms that strive to balance the energy consumption and performance.

The technically interesting aspect of our work is the surprising connections we establish between approximation and online algorithms, economics, game theory, and queuing theory. It is the interplay of ideas from these different areas that lies at the heart of most of the algorithms presented in this thesis.

The main contributions of the thesis can be placed in one of the following categories.

1. Classical Unrelated Machine Scheduling: We give the first polygorithmic approximation algorithms for minimizing the average flow-time and minimizing the maximum flow-time in the offline setting. In the online and non-clairvoyant setting, we design the first non-clairvoyant algorithm for minimizing the weighted flow-time in the resource augmentation model. Our work introduces iterated rounding technique for the offline flow-time optimization, and gives the first framework to analyze non-clairvoyant algorithms for unrelated machines.

2. Polytope Scheduling Problem: To capture the multidimensional nature of the scheduling problems that arise in practice, we introduce Polytope Scheduling Problem (\psp). The \psp problem generalizes almost all classical scheduling models, and also captures hitherto unstudied scheduling problems such as routing multi-commodity flows, routing multicast (video-on-demand) trees, and multi-dimensional resource allocation. We design several competitive algorithms for the \psp problem and its variants for the objectives of minimizing the flow-time and completion time. Our work establishes many interesting connections between scheduling and market equilibrium concepts, fairness and non-clairvoyant scheduling, and queuing theoretic notion of stability and resource augmentation analysis.

3. Energy Efficient Scheduling: We give the first non-clairvoyant algorithm for minimizing the total flow-time + energy in the online and resource augmentation model for the most general setting of unrelated machines.

4. Selfish Scheduling: We study the effect of selfish behavior in scheduling and routing problems. We define a fairness index for scheduling policies called {\em bounded stretch}, and show that for the objective of minimizing the average (weighted) completion time, policies with small stretch lead to equilibrium outcomes with small price of anarchy. Our work gives the first linear/ convex programming duality based framework to bound the price of anarchy for general equilibrium concepts such as coarse correlated equilibrium.

Gender and racial/ethnic differences in addiction severity, HIV risk, and quality of life among adults in opioid detoxification: results from the National Drug Abuse Treatment Clinical Trials Network.

PURPOSE: Detoxification often serves as an initial contact for treatment and represents an opportunity for engaging patients in aftercare to prevent relapse. However, there is limited information concerning clinical profiles of individuals seeking detoxification, and the opportunity to engage patients in detoxification for aftercare often is missed. This study examined clinical profiles of a geographically diverse sample of opioid-dependent adults in detoxification to discern the treatment needs of a growing number of women and whites with opioid addiction and to inform interventions aimed at improving use of aftercare or rehabilitation. METHODS: The sample included 343 opioid-dependent patients enrolled in two national multi-site studies of the National Drug Abuse Treatment Clinical Trials Network (CTN001-002). Patients were recruited from 12 addiction treatment programs across the nation. Gender and racial/ethnic differences in addiction severity, human immunodeficiency virus (HIV) risk, and quality of life were examined. RESULTS: Women and whites were more likely than men and African Americans to have greater psychiatric and family/social relationship problems and report poorer health-related quality of life and functioning. Whites and Hispanics exhibited higher levels of total HIV risk scores and risky injection drug use scores than African Americans, and Hispanics showed a higher level of unprotected sexual behaviors than whites. African Americans were more likely than whites to use heroin and cocaine and to have more severe alcohol and employment problems. CONCLUSIONS: Women and whites show more psychopathology than men and African Americans. These results highlight the need to monitor an increased trend of opioid addiction among women and whites and to develop effective combined psychosocial and pharmacologic treatments to meet the diverse needs of the expanding opioid-abusing population. Elevated levels of HIV risk behaviors among Hispanics and whites also warrant more research to delineate mechanisms and to reduce their risky behaviors.

A new instrument for measuring anticoagulation-related quality of life: development and preliminary validation.

BACKGROUND: Anticoagulation can reduce quality of life, and different models of anticoagulation management might have different impacts on satisfaction with this component of medical care. Yet, to our knowledge, there are no scales measuring quality of life and satisfaction with anticoagulation that can be generalized across different models of anticoagulation management. We describe the development and preliminary validation of such an instrument - the Duke Anticoagulation Satisfaction Scale (DASS). METHODS: The DASS is a 25-item scale addressing the (a) negative impacts of anticoagulation (limitations, hassles and burdens); and (b) positive impacts of anticoagulation (confidence, reassurance, satisfaction). Each item has 7 possible responses. The DASS was administered to 262 patients currently receiving oral anticoagulation. Scales measuring generic quality of life, satisfaction with medical care, and tendency to provide socially desirable responses were also administered. Statistical analysis included assessment of item variability, internal consistency (Cronbach's alpha), scale structure (factor analysis), and correlations between the DASS and demographic variables, clinical characteristics, and scores on the above scales. A follow-up study of 105 additional patients assessed test-retest reliability. RESULTS: 220 subjects answered all items. Ceiling and floor effects were modest, and 25 of the 27 proposed items grouped into 2 factors (positive impacts, negative impacts, this latter factor being potentially subdivided into limitations versus hassles and burdens). Each factor had a high degree of internal consistency (Cronbach's alpha 0.78-0.91). The limitations and hassles factors consistently correlated with the SF-36 scales measuring generic quality of life, while the positive psychological impact scale correlated with age and time on anticoagulation. The intra-class correlation coefficient for test-retest reliability was 0.80. CONCLUSIONS: The DASS has demonstrated reasonable psychometric properties to date. Further validation is ongoing. To the degree that dissatisfaction with anticoagulation leads to decreased adherence, poorer INR control, and poor clinical outcomes, the DASS has the potential to help identify reasons for dissatisfaction (and positive satisfaction), and thus help to develop interventions to break this cycle. As an instrument designed to be applicable across multiple models of anticoagulation management, the DASS could be crucial in the scientific comparison between those models of care.