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.

Typical delay determines waiting time on periodic-food schedules: Static and dynamic tests.

Pigeons and other animals soon learn to wait (pause) after food delivery on periodic-food schedules before resuming the food-rewarded response. Under most conditions the steady-state duration of the average waiting time, t, is a linear function of the typical interfood interval. We describe three experiments designed to explore the limits of this process. In all experiments, t was associated with one key color and the subsequent food delay, T, with another. In the first experiment, we compared the relation between t (waiting time) and T (food delay) under two conditions: when T was held constant, and when T was an inverse function of t. The pigeons could maximize the rate of food delivery under the first condition by setting t to a consistently short value; optimal behavior under the second condition required a linear relation with unit slope between t and T. Despite this difference in optimal policy, the pigeons in both cases showed the same linear relation, with slope less than one, between t and T. This result was confirmed in a second parametric experiment that added a third condition, in which T + t was held constant. Linear waiting appears to be an obligatory rule for pigeons. In a third experiment we arranged for a multiplicative relation between t and T (positive feedback), and produced either very short or very long waiting times as predicted by a quasi-dynamic model in which waiting time is strongly determined by the just-preceding food delay.

Hypoallergenic legume crops and food allergy: factors affecting feasibility and risk.

Currently, the sole strategy for managing food hypersensitivity involves strict avoidance of the trigger. Several alternate strategies for the treatment of food allergies are currently under study. Also being explored is the process of eliminating allergenic proteins from crop plants. Legumes are a rich source of protein and are an essential component of the human diet. Unfortunately, legumes, including soybean and peanut, are also common sources of food allergens. Four protein families and superfamilies account for the majority of legume allergens, which include storage proteins of seeds (cupins and prolamins), profilins, and the larger group of pathogenesis-related proteins. Two strategies have been used to produce hypoallergenic legume crops: (1) germplasm lines are screened for the absence or reduced content of specific allergenic proteins and (2) genetic transformation is used to silence native genes encoding allergenic proteins. Both approaches have been successful in producing cultivars of soybeans and peanuts with reduced allergenic proteins. However, it is unknown whether the cultivars are actually hypoallergenic to those with sensitivity. This review describes efforts to produce hypoallergenic cultivars of soybean and peanut and discusses the challenges that need to be overcome before such products could be available in the marketplace.

I'll have what she's having: Effects of social influence and body type on the food choices of others

This research examines how the body type of consumers affects the food consumption of other consumers around them. We find that consumers anchor on the quantities others around them select but that these portions are adjusted according to the body type of the other consumer. We find that people choose a larger portion following another consumer who first selects a large quantity but that this portion is significantly smaller if the other is obese than if she is thin. We also find that the adjustment is more pronounced for consumers who are low in appearance self-esteem and that it is attenuated under cognitive load. © 2009 by Journal of Consumer Research, Inc.

Sensory information and associative cues used in food detection by wild vervet monkeys.

Understanding animals' spatial perception is a critical step toward discerning their cognitive processes. The spatial sense is multimodal and based on both the external world and mental representations of that world. Navigation in each species depends upon its evolutionary history, physiology, and ecological niche. We carried out foraging experiments on wild vervet monkeys (Chlorocebus pygerythrus) at Lake Nabugabo, Uganda, to determine the types of cues used to detect food and whether associative cues could be used to find hidden food. Our first and second set of experiments differentiated between vervets' use of global spatial cues (including the arrangement of feeding platforms within the surrounding vegetation) and/or local layout cues (the position of platforms relative to one another), relative to the use of goal-object cues on each platform. Our third experiment provided an associative cue to the presence of food with global spatial, local layout, and goal-object cues disguised. Vervets located food above chance levels when goal-object cues and associative cues were present, and visual signals were the predominant goal-object cues that they attended to. With similar sample sizes and methods as previous studies on New World monkeys, vervets were not able to locate food using only global spatial cues and local layout cues, unlike all five species of platyrrhines thus far tested. Relative to these platyrrhines, the spatial location of food may need to stay the same for a longer time period before vervets encode this information, and goal-object cues may be more salient for them in small-scale space.

Validation of the Food-Linked Virtual Response task.

This research validates a computerized dietary selection task (Food-Linked Virtual Response or FLVR) for use in studies of food consumption. In two studies, FLVR task responses were compared with measures of health consciousness, mood, body mass index, personality, cognitive restraint toward food, and actual food selections from a buffet table. The FLVR task was associated with variables which typically predict healthy decision-making and was unrelated to mood or body mass index. Furthermore, the FLVR task predicted participants' unhealthy selections from the buffet, but not overall amount of food. The FLVR task is an inexpensive, valid, and easily administered option for assessing momentary dietary decisions.