M&SOM Review

For nearly three decades, the predominant trend in the U.S. manufacturing industry has been offshoring, which refers to manufacturers moving or building factories offshore (most prominently in China) to produce goods for the onshore (U.S.) market. The top driver of this trend has been lower labor costs in emerging economies. Recently, however, this labor arbitrage has been gradually tapering off as wages in China grew 10–20% annually. As such, a growing number of U.S.-based companies started to consider bringing factories back to the United States—dubbed reshoring—and some have taken actions. However, the adoption of reshoring is slower than many have hoped, generating much debate about whether reshoring is viable and scalable.

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The educational service since the early days of the School of Athens was built on the idea of a service provider (i.e., the instructor) delivering the content and orchestrating a discussion among participants. The service quality, measured by learning outcomes, depends critically on the quality of discussion and the instructor’s ability to engage participants in the learning process (i.e., the Socratic method). The main issue with this method is that it is expensive: college student loan debt in the United States, reaching $1.2 trillion, is the second largest debt after mortgage debt.

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From management consulting to legal teams and flight crews, product development or scientific research teams, fluid teams are the norm rather than the exception in many knowledge-intensive work settings. Such teams are assembled for a specific purpose and operate for a limited time, after which they dissolve and some team members may work together again as part of another team. Fluid teams are particularly prominent in dynamic operational environments of healthcare. Imagine a surgery unit of a busy hospital with continuous assembly and dissolution of teams.

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As we move into the second decade of the 21st century, the public is more convinced than ever that the US healthcare system suffers from an obsession with medical tests and procedures. The Institute of Medicine estimated up to $765 billion per year, or 6 percent of the nation’s GDP, is spent on low-value tests and treatments. In the case of medical testing, various studies estimate as much as 30 percent of it is not cost effective, a phenomenon commonly referred to as overtesting.

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Standby upgrades are an innovative revenue management practice that has recently been adopted by many hotel chains, where guests are offered a premium room upgrade at a discounted price after they reserve a standard room, and only charged for the upgrade if the premium room is available upon their arrival to the hotel. This program is marketed as being beneficial for the hotel by monetizing premium room inventory that may otherwise go unused, creating awareness for room features such as city/ocean view, and improving guest satisfaction and loyalty.

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Setting an appropriate inventory service level is critical and requires balancing the costs of holding too much inventory against the costs of holding too little. One key factor in determining service level is customers’ responses to product unavailability. Will customers shift their demand to other firms, change their willingness to pay, or respond in some other fashion? Researchers have explored the relationship between service level and demand in business-to-consumer (B2C) contexts both analytically and empirically. But, what about the relationship between service levels and demand upstream, in a business-to-business (B2B) context? Do retail buyers—individuals who work for the retailer and procure on behalf of end consumers—respond to changes in service level in a similar way?

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The U.S. electric car manufacturer Tesla, and its rockstar CEO Elon Musk, are never short of surprises. In June 2014, Elon, in broken English (a reference to an Internet meme), announced that “all our patents are belong to you,” opening up all of Tesla’s patents to anyone who wants to use them “in good faith.” This announcement ignited the Internet. Some praised Elon’s altruism and open-source spirit. Others viewed it as a publicity stunt, believing that the real secret recipe was never patented (just like Coca-Cola). Elon’s own words, “the world would all benefit from a common, rapidly evolving technology platform,” hinted that he was not entirely altruistic, and wanted to promote the electric vehicle technology.

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For customers of retail products, returning an unwanted purchase has never been easier. “Your feedback is helping us build Earth’s Most Customer-Centric Company,” ends an email from a customer service representative at a major online retailer to a product return request recently submitted by one of the authors. Slogans like “Unconditional return within 30 days,” “Money back guarantee within 60 days,” “100% refund if you’re not satisfied,” have become the gold standard in modern marketing regardless of the product, industry, or sales channel. One reason behind this shift is that lenient return policies give important advantages to original equipment manufacturers (OEMs) by signaling quality, improving brand image, and, hopefully, leading to growth in revenues and profit.

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Imagine you are a branch manager for a nationwide retail bank. A major competitor has just opened its newest location, and it is right next-door to yours. The competitor offers better service quality than your branch does but worse rates. How should you respond? Do nothing? Cut rates? Improve service? How should your response differ if the competitor offers better rates but worse quality?

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