ABSTRACT

This Faculty Early Career Development Program (CAREER) grant will contribute to the advancement of national prosperity and economic welfare by designing more efficient e-commerce and service systems that embrace and leverage consumer flexibility. Consumer flexibility refers to a consumer's explicit willingness to receive one of an assortment of offered options in exchange for a reward or discount. Two examples in the retail and service sectors include (i) opaque products in online retail and travel, where consumers are willing to purchase an article of clothing of unknown color or travel to an unspecified destination, and (ii) large time windows in scheduled services such as grocery delivery and medical appointments, where consumers are willing to receive service in one of multiple time slots. The research fundamentally benefits consumers and firms by providing discounted flexible options to consumers while reducing operational costs of selling products and services. This award supports research on foundational tools for understanding, embedding, and embracing consumer flexibility in e-commerce and service systems, focusing on both the demand and supply perspectives. The plan to integrate research and education includes further developing the NYC Operations Day conference to embrace doctoral students via presentation opportunities, mentorship, and funding from this project, as well as course enrichment and the mentoring and education of undergraduate and doctoral students.

In order to fully embrace consumer flexibility, researchers and practitioners require a new set of tools for managing demand with flexible options and for converting consumer flexibility into operational efficiency. From the demand perspective, this project provides a computationally tractable framework for incorporating consumer flexibility. Since the valuations for flexible options are correlated with the traditional options with special structure, previous models and algorithms in this domain do not apply. This research will develop new analytical methods and tractable approximation approaches for modeling consumer behavior in choice models, leading to new pricing analysis and tools that address the inherent mathematical difficulties introduced by flexible options. From the supply perspective, classical operational models will be extended to incorporate consumer flexibility. In inventory management, this project will develop algorithms that quantify and leverage consumer flexibility to better balance inventory and reduce supply chain costs. For scheduled services, such as grocery delivery, new models will be developed to guide the design of time windows that effectively manage capacity and ensure efficient vehicle routes.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.

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