Skip to main content
eScholarship
Open Access Publications from the University of California

UCLA

UCLA Electronic Theses and Dissertations bannerUCLA

Interdisciplinary Essays in Economics and Operations Management

Abstract

In this dissertation I present three papers, each as an individual chapter. The first two papers are in the field of economics, while the third paper is in the field of operations management.

In the first paper, titled "Projects and Team Dynamics", I study the dynamic collaboration of a team on a project that progresses gradually over time and generates a payoff upon completion. The main result is that members of a larger team work harder than members of a smaller team if and only if the project is sufficiently far from completion. In contrast, as the project gets close to completion, the aggregate effort of a larger team can become less than that of a smaller team due to aggravated free-riding. This result has three implications for the organization of partnerships and when a manager recruits agents into a team to undertake a project on her behalf. First, given a fixed budget, larger teams are preferable the longer the project is. Second, the manager can benefit from dynamically decreasing the team size as the project approaches completion. Third, asymmetric compensation is preferable if the project is sufficiently short.

The second paper titled "Project Design with Limited Commitment and Teams" studies the interaction between a group of agents who exert costly effort over time to complete a project, and a manager who chooses its objectives. The manager can commit to the requirements only when the project is sufficiently close to completion. This is common in projects that involve design or quality objectives which are hard to define far in advance. The main result is that the manager has incentives to extend the project as it progresses: she is time-inconsistent. This result has three implications. First, the manager will choose a larger project if she has less commitment power. Second, if the agents receive a fraction of the project's worth upon its completion, then the manager should delegate the decision rights over the project size to the agents unless she has sufficient commitment power. Third, cultivating an insider culture so that the agents act in the interest of the entire team may aggravate the manager's commitment problem and lower profits.

The third paper titled "The Retail Planning Problem Under Demand Uncertainty" studies the problem faced by a retailer who chooses suppliers, and determines the production, distribution and inventory planning for products with uncertain demand in order to minimize total expected costs. This problem is often faced by large retail chains that carry private label products. We formulate this problem as a convex mixed integer program and show that it is strongly NP-hard. We determine a lower bound by applying a Lagrangean relaxation and show that this bound outperforms the standard convex programming relaxation, while being computationally efficient. We then develop heuristics to generate feasible solutions. Our computational results indicate that our convex programming heuristic yields feasible solutions that are close to optimal with an average suboptimality gap at 3.4%. Finally, we develop managerial insights for practitioners facing this problem.

Main Content
For improved accessibility of PDF content, download the file to your device.
Current View