Group assignment_2

This assignment is designed to encourage students to discover the emerging trends in operations
management and how they change the way business operates nowadays. There are the following three
topics from which you could choose one to write the group assignment.

1) Online (Interactive) Product Assortment

Online sales are now prevalent in the retail industry. During an online sale, a seller offers a handpicked
assortment, i.e., a subset of products, to an arriving customer. The customer’s purchase decision
crucially depends on his offered assortment. He first scrutinizes all the products in the assortment, then
decides which product he likes the most. After that, he either purchases his favorite, or purchase
nothing if his willingness-to-pay is below the price for his favorite. The assortment problem is then a
problem of deciding which subset of products to offer to customer in order to maximize the total
revenue over the entire selling season. To do so, the seller needs to know a customer’s preferences for
products, e.g., the choice model according to which a customer makes his purchase. However, this
information (the choice model) is often not known in practice. This motivates the seller to maximize the
revenue and learn the underlying choice model simultaneously. This resembles an exploration-
exploitation problem, which has been studied extensively by researchers in computer science. Recently
development on online product assortment problems utilize machine learning algorithms to find the
optimal balance between exploration and exploitation.

Product assortment can (should!) also be customized in a real-time manner. Online interactive
recommender systems strive to promptly suggest to customers appropriate items according to the
current context including both the consumer and item content information. These systems try to
continuously maximize the customers’ satisfaction over the long run. Application of such systems at
Netflix, YouTube, Sportify, etc., show great success.

Product assortment problem is just one example of dynamic resource allocation problems. These
problems are not just concerned with giving humans what they want, when they want it. They will also
be essential for tackling some of the world’s most fundamental and complex issues, including climate
change, as they help us allocate our planet’s often scarce and depleted resources in the most efficient
ways possible.

2) Sharing Economy

The sharing economy involves buying and selling temporary access to goods or services, usually
arranged through an online platform. It is one of the fastest growing business trends in history, with
investors dumping more than $23 billion in venture capital funding since 2010 into startups operating
with a share-based model. By using new digital platforms, the sharing economy has created an effective

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business model for the utilization of goods and availability of services. The sharing economy has a
history of disrupting traditional business sectors. The lack of overhead and inventory help share-based
businesses run lean. The increased efficiencies allow these brands to pass-through value to their
customers and supply chain partners. Traditional industries are being affected by the sharing economy—
and many traditional brands will struggle if they do not adapt to the changing landscape.

In the transportation industry, Uber’s ascension is one of the best examples to illustrate the effect of
the sharing economy in a traditional sector. Uber and other ride-sharing services offer an affordable,
safe, and convenient alternative to traditional transportation options such as public transit or taxi cabs.
By utilizing an efficient mobile application and network of vetted drivers, Uber satisfies consumers’
transportation demands while providing an arguably better user experience than traditional means. In
just New York City alone, there are roughly 4.5 times more Uber drivers than yellow cabs. This has
caused the price of owning a taxi cab in New York City to drop from $1 million in 2015 to less than
$200,000 today.

Top Sharing Economy Brands in the Transportation Space:

• Uber: $72 Billion

• Didi: $50 Billion

• Lyft: $11 Billion

In the professional and personal services space. services are defined by work that requires special
knowledge, skills, experience, certifications, or training like copywriters, accountants, or plumbers. In
relation to the sharing economy, this is also referred to as freelancing, gigs, and other trendy terms
equating to short-term labor. Powerhouses like Fiverr, Upwork, and TaskRabbit create value by
providing a fast, friendly, and secure platform on which people or businesses can find contractors for
hire. Freelancers can earn extra money sharing their trade skills and expertise—not unlike owners
renting access to their home or car owners sharing rides.

Top Sharing Economy Brands in the Professional and Personal Services Space:

• Fiverr: $351 Million

What Is Next for the Sharing Economy?

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3) Blockchain Application in Supply Chain Management

In today’s business world, a company is likely to work with about 30 partners and many more suppliers
across multiple industries to product products and services. Blockchain technology, which offers a more
decentralized approach to data management and sharing, can improve the transparency, speed and
responsiveness of these complex ecosystems. Blockchain's immutable ledger makes it well suited to
tasks such as tracking goods as they move and change hands in the supply chain. Using a blockchain
opens up several options for companies transporting these goods. Entries on a blockchain can be used
to queue up events with a supply chain (allocating goods newly arrived at a port to different shipping
containers, for example). Blockchain provides a new and dynamic means of organizing tracking data and
putting it to use. Companies like Skuchain and Factom offer solutions that utilize blockchain in supply
chain management solutions.

Blockchain can improve the pharmaceutical supply chain in a variety of ways. Pharmaceuticals often
need to be kept in a particular temperature zone. Many medications—especially biologics—being
shipped from manufacturer to warehouse to another warehouse need to stay within a certain
temperature range. With blockchain technology, this can be programmed in, triggering an alert when
the temperature gets too high — or falls too low. Blockchain’s transparency may also help reduce fraud
for pharmaceuticals, according to a report from Deloitte. The global counterfeit drug market size is
around $75-200 billion. The status quo—a complicated and opaque supply chain—exacerbates the
problem. Blockchain’s immutability provides a basis for traceability of drugs from manufacturer to end
consumer, identifying where the supply chain breaks down. In addition to cutting losses, there’s the
potential to improve consumer safety and prevent some of the estimated 1 million deaths annually from
counterfeit medicine, according to Deloitte.

From an operational standpoint, blockchains are not more efficient than centralized data systems. After
all, they require additional computation power. But the technology is uniquely able to resolve important
issues of trust and visibility in far-flung, increasingly fluid manufacturing and supply networks. It
promises to be a game-changer for companies that need more agile supply chains to keep up with
changing customer demands, or that are making the transition from market player to platform provider.
They key is knowing whether and how to capitalize on a blockchain, when to combine it with other
digital technologies for even greater synergies, and how to weigh its cost/value tradeoffs relative to
those of other advanced supply chain management approaches.

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Assignment requirement

Imagine you own a cloud analytics company, specialized in offering solutions to operations problems.
Nowadays, your clients are considering about adopting new business concepts such as personalized
product recommendation. To expand your business, you need to offer tailored plans regarding these
concepts. For this assignment, write a business plan on the topic you chose, based on the following
questions (please do not write your business plan like a Q&A):

1. How does it, e.g., sharing economy, exactly work? Please illustrate it in detail. (10%)

2. What are the recent developments in this area, e.g., online product assortment? (10%)

3. What do you think are the major benefits of using this method, e.g., machine learning, for such
problems, e.g., online product assortment? What are the challenges? (10%)

4. What is your plan regarding this business concept? Describe it from an operations perspective. Can
you add something new to the existing development in this area? In other words, what else do you think
can be done to improve the performance? Describe your original ideas in detail. (70%)

Tips: you first need to answer who are your clients, i.e., who can benefit from this concept. For example,
grocery stores do not need blockchain or online product assortment. To answer this question, you need
to know the condition under which a technology brings more benefits than costs. You need to give a
concrete example of a potential client and give details on how he can apply your business plan. Do not
just throw out trendy words such as big data, machine learning, etc., without telling your client how
exactly these technologies work in practice (in steps).