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.

Phylotastic! Making tree-of-life knowledge accessible, reusable and convenient.

BACKGROUND: Scientists rarely reuse expert knowledge of phylogeny, in spite of years of effort to assemble a great "Tree of Life" (ToL). A notable exception involves the use of Phylomatic, which provides tools to generate custom phylogenies from a large, pre-computed, expert phylogeny of plant taxa. This suggests great potential for a more generalized system that, starting with a query consisting of a list of any known species, would rectify non-standard names, identify expert phylogenies containing the implicated taxa, prune away unneeded parts, and supply branch lengths and annotations, resulting in a custom phylogeny suited to the user's needs. Such a system could become a sustainable community resource if implemented as a distributed system of loosely coupled parts that interact through clearly defined interfaces. RESULTS: With the aim of building such a "phylotastic" system, the NESCent Hackathons, Interoperability, Phylogenies (HIP) working group recruited 2 dozen scientist-programmers to a weeklong programming hackathon in June 2012. During the hackathon (and a three-month follow-up period), 5 teams produced designs, implementations, documentation, presentations, and tests including: (1) a generalized scheme for integrating components; (2) proof-of-concept pruners and controllers; (3) a meta-API for taxonomic name resolution services; (4) a system for storing, finding, and retrieving phylogenies using semantic web technologies for data exchange, storage, and querying; (5) an innovative new service, DateLife.org, which synthesizes pre-computed, time-calibrated phylogenies to assign ages to nodes; and (6) demonstration projects. These outcomes are accessible via a public code repository (GitHub.com), a website (http://www.phylotastic.org), and a server image. CONCLUSIONS: Approximately 9 person-months of effort (centered on a software development hackathon) resulted in the design and implementation of proof-of-concept software for 4 core phylotastic components, 3 controllers, and 3 end-user demonstration tools. While these products have substantial limitations, they suggest considerable potential for a distributed system that makes phylogenetic knowledge readily accessible in computable form. Widespread use of phylotastic systems will create an electronic marketplace for sharing phylogenetic knowledge that will spur innovation in other areas of the ToL enterprise, such as annotation of sources and methods and third-party methods of quality assessment.

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.