Prof. Dr. Andreas K. Gernert

Abstract

Several low- and middle-income countries’ emergency transportation systems (ETSs) do not have a centralized emergency number. Instead, they have many independent ambulance providers, each with a small number of ambulances. As a result, ETSs in these contexts lack coordination and ambulances. Using a free-entry equilibrium model, we show that in such decentralized systems, the probability that any given call can be served by at least one ambulance, that is, its coverage, is at most 71.54%, regardless of the ETS’s profitability. We examine three business models that can address the ETS’s lack of coordination and ambulances: (i) a competitor-only business model, where an entrepreneur enters the ETS and acquires ambulances to compete with existing providers; (ii) a platform business model, where an entrepreneur coordinates existing providers; and (iii) an innovative platform-plus business model, where an entrepreneur combines (i) and (ii): setting-up a platform and acquiring platform-owned ambulances. We also examine a government-run platform that takes no commissions from providers. Using a game-theoretic approach, we find that it is optimal for all platform models to incentivize all providers to join. However, only the government-run platform may incentivize providers to acquire additional ambulances. Furthermore, a government-run platform offers higher coverage than a platform-plus only when the platform’s power to coordinate ambulance providers is moderate. Our results can help entrepreneurs and policymakers in LMICs navigate various tradeoffs in improving their countries’ ETS.

Abstract

Several low- and middle-income countries’ emergency transportation systems (ETSs) do not have a centralized emergency number. Instead, they have many independent ambulance providers, each with a small number of ambulances. As a result, ETSs in these contexts lack coordination and ambulances. Using a free-entry equilibrium model, we show that in such decentralized systems, the probability that any given call can be served by at least one ambulance, that is, its coverage, is at most 71.54%, regardless of the ETS’s profitability. We examine three business models that can address the ETS’s lack of coordination and ambulances: (i) a competitor-only business model, where an entrepreneur enters the ETS and acquires ambulances to compete with existing providers; (ii) a platform business model, where an entrepreneur coordinates existing providers; and (iii) an innovative platform-plus business model, where an entrepreneur combines (i) and (ii): setting-up a platform and acquiring platform-owned ambulances. We also examine a government-run platform that takes no commissions from providers. Using a game-theoretic approach, we find that it is optimal for all platform models to incentivize all providers to join. However, only the government-run platform may incentivize providers to acquire additional ambulances. Furthermore, a government-run platform offers higher coverage than a platform-plus only when the platform’s power to coordinate ambulance providers is moderate. Our results can help entrepreneurs and policymakers in LMICs navigate various tradeoffs in improving their countries’ ETS.

Abstract

In the pharmaceutical industry, personalized medicine is increasingly replacing the traditional blockbuster drug concept. Personalized medicine consists of a targeted drug that is only prescribed if a companion diagnostic test detects the corresponding biomarker. This concept promises improved treatments of various diseases. However, personalized medicine also presents pharmaceutical firms with new challenges resulting from interdependencies in the drug and diagnostic test development processes. Although pharmaceutical firms generally benefit from competition among diagnostic firms, the threat of substitutes from competitors could cause diagnostic firms to step back from new product development in the first place, leading to lost revenues for the pharmaceutical firm. We consider a pharmaceutical firm that may inform two competing differentiated diagnostic firms about a drug under development, such that these firms can develop a corresponding diagnostic test. We show which diagnostic firm the pharmaceutical firm should inform first and how granting early exclusivity to a single diagnostic firm can maximize pharmaceutical profits from personalized medicine.

Abstract

Diversity, equity, and inclusion (DEI) are at the core of present-day health and humanitarian logistics. Aid organizations advocate inclusive people-centered approaches to ensure that affected communities receive appropriate aid in an effective and equitable way. Tensions and even conflicts can arise if affected communities perceive the distribution of aid as inequitable. These perceptions are driven by people’s so-called distributional preferences. These preferences are shaped by culture, social bonds, and experiences, and they describe how an individual’s well-being and behavior are impacted by potential inequalities. Their importance is increasingly recognized by aid organizations, but research on equity in health and humanitarian logistics remains focused on equal access and prioritizing needs. Using current examples from the Syrian and Rohingya refugee crises, we show the importance of recognizing and managing distributional preferences. Based on these examples and in line with DEI principles, we discuss several ways that we, as the operations community, can help conceptualize inclusive and people-centered approaches that account for distributional preferences.

Abstract

Diversity, equity, and inclusion (DEI) are at the core of present-day health and humanitarian logistics. Aid organizations advocate inclusive people-centered approaches to ensure that affected communities receive appropriate aid in an effective and equitable way. Tensions and even conflicts can arise if affected communities perceive the distribution of aid as inequitable. These perceptions are driven by people’s so-called distributional preferences. These preferences are shaped by culture, social bonds, and experiences, and they describe how an individual’s well-being and behavior are impacted by potential inequalities. Their importance is increasingly recognized by aid organizations, but research on equity in health and humanitarian logistics remains focused on equal access and prioritizing needs. Using current examples from the Syrian and Rohingya refugee crises, we show the importance of recognizing and managing distributional preferences. Based on these examples and in line with DEI principles, we discuss several ways that we, as the operations community, can help conceptualize inclusive and people-centered approaches that account for distributional preferences.

Abstract

To maintain future supplier competition, manufacturers may support financially distressed suppliers by sourcing from them, even if they are less efficient than competitors, and by procuring larger quantities from them at higher prices. We analyze these strategies in a model in which a manufacturer decides for one of two available suppliers, supplier bankruptcy risk is endogenous, and financial distress can lead to internal or external reorganization. Following bankruptcy, the remaining supplier may serve as a backup option. Our research identifies settings in which the manufacturer should support the distressed supplier. We also find that in some cases, a nondistressed supplier may charge price premiums due to its competitor's distress, while in other cases, it may use predatory pricing to drive its competitor into bankruptcy. We complement our results with a small case study and show how our model can explain patterns observed in industry.