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.

A REPRESENTATIVE OUTSIDER AND THE INCLUSION OF THE OUTSIDER IN ACTS 8:26-40

In Luke’s two volumes, Luke is not interested only in Gentiles and those with high social status but also in the marginalized and those who are outsiders. This dissertation seeks to read Luke’s concern for outsiders and the theme of the inclusion of outsiders in the new kingdom of God in Luke’s narrative of the Ethiopian eunuch’s conversion in Acts 8:26-40. This paper examines the Ethiopian eunuch’s complex identity from the perspectives of the Greco-Roman world, Old Testament (LXX) allusions to the Elijah-Elisha narratives, and Luke’s interpretation of the Isaianic quotation of the Suffering Servant in Acts 8:32-33 (cf. Isaiah 53:7-8). This study pays close attention to the correlations between the theme of outsiders and three key characters in Acts 8:26-40: the Ethiopian eunuch, Philip, and the Suffering Servant. First, Luke depicts the Ethiopian eunuch as the consummate outsider—geographically, morally, socially, ethnically, and in terms of gender—and indicates that the eunuch represents other marginalized outsiders. The eunuch shows no one can prevent outsiders like him from inclusion in the kingdom of God. Second, Luke portrays Philip as a prophet, specifically a prophet like Elijah and Elisha. Philip emulates Elijah and Elisha by reaching out to the outsider (in this instance, the Ethiopian eunuch). Third, Luke presents the Isaianic Suffering Servant as a religious and social outsider and identifies the character with Jesus and the Ethiopian eunuch. The indescribable descendants of the Suffering Servant signify a universally inclusive messianic community and fulfill the outsiders’ inclusion within the people of God as Isaiah prophesied (Isaiah 56:3-8). This thesis finally suggests ways to read the story of the Ethiopian eunuch today and concludes that it is imperative to include those outsiders among us within the community of Jesus’s followers.