T his paper studies the optimal component procurement strategies of two competing OEMs selling substitutable products. The OEMs outsource their production to a common contract manufacturer, who in turn needs an input from a component supplier. Each OEM may either directly procure the input from the component supplier, or delegate the procurement task to the contract manufacturer. We first analyze the OEMs' procurement game under a non-strategic supplier whose component price is exogenously given. It is found that symmetric equilibria arise for most situations, that is, both OEMs either control or delegate their component procurement in equilibrium. Interestingly, despite the commonly-held belief that the contract manufacturer would be worse off as OEMs gain component procurement control, we show that the contract manufacturer may enjoy a higher profit. Then we study the OEMs' procurement game under a strategic supplier who can set its component price. We find that the supplier's strategic pricing behavior plays a critical role in the equilibrium procurement structure. In particular, in the equilibrium under strategic supplier, the larger OEM always uses delegation while the smaller OEM may use either delegation or control. By identifying the driving forces behind the OEMs' procurement choices, this research helps explain observed industry practices and offer useful guidelines for firms' component sourcing decisions.

Objectives: The objective was to derive and validate a novel queuing theory-based model that predicts the effect of various patient crowding scenarios on patient left without being seen (LWBS) rates.Methods: Retrospective data were collected from all patient presentations to triage at an urban, academic, adult-only emergency department (ED) with 87,705 visits in calendar year 2008. Data from specific time windows during the day were divided into derivation and validation sets based on odd or even days. Patient records with incomplete time data were excluded. With an established call center queueing model, input variables were modified to adapt this model to the ED setting, while satisfying the underlying assumptions of queueing theory. The primary aim was the derivation and validation of an ED flow model. Chi-square and Student's t-tests were used for model derivation and validation. The secondary aim was estimating the effect of varying ED patient arrival and boarding scenarios on LWBS rates using this model. Results:The assumption of stationarity of the model was validated for three time periods (peak arrival rate = 10:00 a.m. to 12:00 p.m.; a moderate arrival rate = 8:00 a.m. to 10:00 a.m.; and lowest arrival rate = 4:00 a.m. to 6:00 a.m.) and for different days of the week and month. Between 10:00 a.m. and 12:00 p.m., defined as the primary study period representing peak arrivals, 3.9% (n = 4,038) of patients LWBS. Using the derived model, the predicted LWBS rate was 4%. LWBS rates increased as the rate of ED patient arrivals, treatment times, and ED boarding times increased. A 10% increase in hourly ED patient arrivals from the observed average arrival rate increased the predicted LWBS rate to 10.8%; a 10% decrease in hourly ED patient arrivals from the observed average arrival rate predicted a 1.6% LWBS rate. A 30-minute decrease in treatment time from the observed average treatment time predicted a 1.4% LWBS. A 1% increase in patient arrivals has the same effect on LWBS rates as a 1% increase in treatment time. Reducing boarding times by 10% is expected to reduce LWBS rates by approximately 0.8%. Conclusions:This novel queuing theory-based model predicts the effect of patient arrivals, treatment time, and ED boarding on the rate of patients who LWBS at one institution. More studies are needed to validate this model across other institutions.ACADEMIC EMERGENCY MEDICINE 2013; 20:939-946

This paper explores the merits of hedging stochastic input costs (i.e., reducing the risk of adverse changes in costs) in a decentralized, risk-neutral supply chain. Specifically, we consider a generalized version of the well-known “selling-to-the-newsvendor” model in which both the upstream and the downstream firms face stochastic input costs. The firms’ operations are intertwined—i.e., the downstream buyer depends on the upstream supplier for delivery and the supplier depends on the buyer for purchase. We show that if left unmanaged, the stochastic costs that reverberate through the supply chain can lead to significant financial losses. The situation could deteriorate to the point of a supply disruption if at least one of the supply chain members cannot profitably make its product. To the extent that hedging can ensure continuation in supply, hedging can have value to at least some of the members of the supply chain. We identify conditions under which the risk of the supply chain breakdown will cause the supply chain members to hedge their input costs: (i) the downstream buyer’s market power exceeds a critical threshold; or (ii) the upstream firm operates on a large margin, there is a high baseline demand for downstream firm’s final product, and the downstream firm’s market power is below a critical threshold. In absence of these conditions there are equilibria in which neither firm hedges. To sustain hedging in equilibrium, both firms must hedge and supply chain breakdown must be costly. The equilibrium hedging policy will (in general) be a partial hedging policy. There are also situations when firms hedge in equilibrium although hedging reduces their expected payoff.

Queue abandonment has a significant impact on system performance. However, the key drivers for abandonment, particularly in observable systems, are not well understood. To better inform our understanding of abandonment behavior, we study the effect of three operational drivers of abandonment from a hospital emergency department (ED), namely, waiting time, queue length, and observed service rate. We confirm that all three factors affect a patient's propensity for leaving the waiting area without being seen by a physician (LWBS), that is, abandoning the queue. Further, these factors interact with each other in a nonlinear fashion. Both ED crowding and observed service rate influence a patient's perception of waiting time. Moreover, patients are not homogenous in their abandonment response, and we observe behavior that is distinct for patients with severe conditions. Specifically, patients who report to a congested ED with more severe conditions are more inclined to abandon the ED early in the process compared to patients with less severe conditions. Further, we observe that patients with severe conditions who elect to remain in the crowded ED exhibit less sensitivity to waiting time and observed service rate than other patient types. We discuss the implications of this observed abandonment behavior on ED management. K E Y W O R D S abandonment, emergency department crowding, empirical study, health-care operations, left without being seen

This paper studies a global sourcing problem where a buyer sources a product from a supplier to satisfy uncertain market demand. With the increasing length and complexity of today's global supply chains, the buyer may face two issues when designing the sourcing contract: adverse selection (i.e., the supplier's cost structure is private information) and noncontractible capacity (i.e., the supplier's capacity investment is not contractible). We show that noncontractible capacity does not necessarily lead to a lower profit for the buyer, but it may require a more complex contract format to achieve the optimal (second-best) profit. Interestingly, we find that a single, linear contract (or a twopart tariff) could be optimal for the buyer under certain conditions. Even when such a contract is suboptimal, it can deliver close-to-optimal profit for the buyer for a wide range of situations. These findings indicate that the value of using a complex menu of contracts is negligible in such a supply chain setting. A simple two-part tariff is an attractive option for buyers whose goal is to ensure supply while facing both cost uncertainty and contractibility issues. The paper also provides a new explanation for the prevalence of such simple contracts in practice.