Prashant Chintapalli

• Chintapalli, P., 2023, "Optimal multi-period crop procurement and distribution policy with minimum support prices", Socio-Economic Planning Sciences, October 89: 101671 - 101671.
  Abstract: Governments of many developing countries offer minimum earnings to farmers through crop Minimum support price (MSP), which guarantees minimum revenue to farmers who cultivate the crop. The crop procured by a government through MSP is later distributed among poor consumers at subsidized prices through public distribution systems (PDS). Thus, governments combine MSP with the PDS scheme to simultaneously ensure farmers’ welfare and tackle poor consumers’ hunger and nutrition problems. However, improper implementation of the schemes causes burgeoning stockpiles in government warehouses, which eventually causes a substantial increase in operational costs and food wastage. In this paper, we characterize the optimal joint MSP and PDS policy over a finite horizon for two objectives: (i) minimize the total cost and (ii) maximize the net value after accounting for farmers’ benefit. Using the data over 15 years, we show that the optimal policy can substantially reduce operational costs (by about 85%) and improve the net value (by about 1.8 trillion INR). We use a linearly constrained quadratic stochastic dynamic program formulation to model the problem. We derive a simple and efficient joint MSP and PDS operational policy that provides the optimal quantity of crop that should be disbursed through PDS in the current period and the optimal MSP that should be announced for the subsequent period. Our policy is easy to compute and implement and can help policymakers efficiently implement MSP and PDS programs jointly. Our model provides a basic framework to solve the joint MSP and PDS problem and can be modified to incorporate other aspects through additional constraints.

  Link(s) to publication:

  https://www.sciencedirect.com/science/article/pii/S0038012123001830

  http://dx.doi.org/10.1016/j.seps.2023.101671

• Chintapalli, P.; Vakharia, A. J., (Forthcoming), "The Waste Management Supply Chain: A decision framework", Decision Sciences
  Abstract: The alarmingly increasing trends in worldwide waste generation call for a holistic analysis of waste management supply chains. Using a comprehensive end-to-end (i.e., waste generation to waste disposal) decision framework, this article analyzes key decisions of a waste management firm (WMF) focused on the proportions of dry (and wet) waste to recycle (and compost). This framework is applied to assess the impact of: (i) the preprocessing of generated waste at source (i.e., the upstream factors) and (ii) the market prices of recycled dry and composted wet wastes (i.e., the downstream factors) on WMF's decisions. One key insight is that the WMF will choose to process more waste when the market prices for processed wastes are high, and/or when more waste is preprocessed at source. Improvements in presorting can be more economical and offer a long-term sustainable solution to efficient waste management. From a policy perspective, we observe that taxing a WMF for waste disposal could dissuade the WMF from participating in waste processing especially when its marginal processing costs are high. The decision framework and the corresponding model are calibrated to different world regions using secondary data on these regions, classified by their income levels. It is observed from our data analysis that uniform one-size-fits-all policies are dominated by region-specific tailored policies for efficient waste management. Hence, prescriptions should be carefully formulated based on the type of waste generated and the processing/disposal options available in a region. For example, composting more wet waste at source is a better choice in low-, low-middle-, and middle-high-income regions, whereas this is not the case in high-income regions. The proposed decision framework also provides an explanation of the negative impact on recycling initiatives at a local level stemming from decreasing recycled material prices. Given that this is the first study to characterize and analyze the waste management supply chain, the article also highlights some areas for future research.

  Link(s) to publication:

  https://doi.org/10.1111/deci.12595

  http://dx.doi.org/10.1111/deci.12595

• Chintapalli, P.; Tang, C. S., 2022, "The Implications of Crop Minimum Support Price in the Presence of Myopic and Strategic Farmers", European Journal of Operational Research
  Abstract: This paper examines the implications of credit-based MSPs in a setting that is more general than those examined in the research literature. Our setting entails a market comprising of two types of farmers (with heterogeneous production costs): “myopic” farmers (who make their crop selection and production decisions based on recently observed market prices) and “strategic farmers” (who make their decisions by taking all other farmers’ decisions into consideration). In addition, our setting involves two types of crops: “complementary crops” (e.g., cereals and legumes) or “substitutable crops” (e.g., different varieties of cereals). In our model, each type of farmer can select one type of crop to grow in response to a given MSP. By comparing the equilibrium outcomes, we obtain three new results. First, the strategic farmers “counteract” the decisions of the myopic farmers by producing less of the crop when its MSP is low. Second, when the market is dominated by myopic farmers, credit based MSP is more effective than the traditional procurement-based MSP. Third, a higher surplus can be attained by offering MSPs to complementary crops than substituable crops. Moreover, it is beneficial to offer a higher MSP to a crop that is cheaper to cultivate when the budget availability is high. However, when budget availability is low, it is advantageous to offer MSP to the crop that is costlier to cultivate. Also, we illustrate our analysis based on the Bhavantar-Bhugtan-Yojana policy, which is a variant of the credit-based MSP being implemented in India.

  Link(s) to publication:

  https://www.sciencedirect.com/science/article/abs/pii/S0377221721008092?via%3Dihub

  http://dx.doi.org/10.1016/j.ejor.2021.09.034

• Chintapalli, P.; Tang, C. S., 2022, "Crop Minimum Support Price versus Cost Subsidy: Farmer and Consumer Welfare", Production and Operations Management
  Abstract: Besides using earmark budget to support farmer cost subsidies, governments in many developing countries use Minimum support price (MSP) as an alternative subsidy scheme to (i) safeguard farmers' incomes against vagaries in crop price, and (ii) ensure sufficient crop production. Among different MSP schemes, we focus on the credit-based MSP scheme under which a government will not take any possession of a crop; instead, it will credit farmers should the prevailing market price be below the pre-specified MSP. In this paper, we consider a market consisting of infinitesimally small, rational, and strategic farmers (with heterogeneous production costs) who face market and yield uncertainties. Our equilibrium analysis reveals that (i) Although both cost subsidy and MSP induce more production, cost subsidy leads to a higher crop production than MSP; (ii) MSP improves farmer's and consumer's surpluses; however, cost subsidy improves consumer's surplus but it can decrease farmer's surplus, which is unexpected; (iii) Although both programs achieve the same optimal net value (i.e., sum of farmer's and consumer's surpluses minus shortage cost and expenditure), MSP always offers higher farmer's surplus than cost subsidy and (iv) it is beneficial to invest only in cost subsidy, in both cost subsidy and MSP, and only in MSP, when the budget availability is low, moderate, and high, respectively, so that the net surplus (i.e., sum of farmer's and consumer's surpluses less the shortage cost) is also maximized along with the net value generated being maximized.

  Link(s) to publication:

  https://onlinelibrary.wiley.com/doi/epdf/10.1111/poms.13642

  http://dx.doi.org/10.1111/poms.13642

• Chintapalli, P., 2021, "Multi-Sourcing under Supply Uncertainty and Buyer’s Risk Aversion", EURO Journal on Computational Optimization, December 9: 100009 - 100009.
  Abstract: We address the combined problem of supplier (or vendor) selection and ordering decision when a buyer can choose to procure from multiple suppliers whose yields are uncertain and potentially correlated. We model this problem as a stochastic program with recourse in which the buyer purchases from the suppliers in the first period and, if needed, chooses to purchase from the spot market or from the suppliers with excess supply, whichever is beneficial, in the second period in order to meet the target procurement quantity. We solve the above problem using sample average approximation (SAA) technique that enables us to solve the problem easily in practice. We compare the performance of our solution with the certainty equivalent problem, which is practiced widely and which we use as the benchmark, to evaluate the efficacy of our approach. Next, we extend our model to incorporate buyer’s risk aversion with respect to the quantity procured. We reformulate the multi-sourcing problem as a mixed integer linear program (MILP) and adopt a statistical approach to account for buyer’s risk aversion. Thus, we design a simple computational technique that provides an optimal sourcing policy from a set of suppliers when each supplier’s yield is uncertain with a generic probability distribution.

  Link(s) to publication:

  http://dx.doi.org/10.1016/j.ejco.2021.100009

• Chintapalli, P.; Tang, C., 2021, "The Value and Cost of Crop Minimum Support Price: Farmer and Consumer Welfare and Implementation Cost", Management Science, November 67(11): 6839 - 6861.
  Abstract: In many developing countries, crop Minimum support price (MSP) is a subsidy scheme to (i) improve farmer welfare by safeguarding farmers’ incomes against vagaries in crop price, and (ii) improve consumer surplus by ensuring sufficient crop production. Among different mechanisms to operationalize an MSP scheme, we focus on credit-based MSPs under which government will credit farmers should the prevailing market price be below the pre-specified MSP. By accounting for the implementation cost of MSP we examine the effectiveness of MSP in terms of net benefit (i.e., farmer’s surplus minus the implementation cost) and net social value (i.e., sum of farmer’s and consumer’s surpluses minus the implementation cost) in a market that consists of risk-averse farmers with heterogeneous production costs. Also, farmers face two types of uncertainties: (1) market uncertainty and (2) production yield uncertainty. We find that a credit-based MSP can induce crop production, which is intuitive. However, we find some more interesting results: (i) offering a higher MSP may not improve farmer’s surplus, (ii) the net benefit of MSP can be negative: the cost of offering MSP can exceed farmer’s surplus, and (iii) there exists an MSP that maximizes the net social value. We extend our single crop model to the case of two crops to capture the inter-crop MSP interaction. We show that when one crop is more rewarding but riskier than the other crop, then it is sufficient to offer an appropriate MSP for one of the two crops, while offering no MSP to the other crop.

  Link(s) to publication:

  https://pubsonline.informs.org/doi/pdf/10.1287/mnsc.2020.3831

  http://dx.doi.org/10.1287/mnsc.2020.3831

• Caro, F.; Chintapalli, P.; Rajaram, K.; Tang, C. S., 2018, "Improving supplier compliance through joint and shared audits with collective penalty", M&SOM-Manufacturing and Service Operations Management, March 20(2): 363 - 380.
  Abstract: When suppliers (i.e., contract manufacturers) fail to comply with health and safety regulations, buyers (retailers) are compelled to improve supplier compliance by conducting audits and imposing penalties. As a benchmark, we first consider the independent audit-penalty mechanism in which the buyers conduct their respective audits and impose penalties independently. We then examine the implications of two new audit-penalty mechanisms that entail a collective penalty. The first is the joint mechanism under which buyers conduct audits jointly, share the total audit cost incurred, and impose a collective penalty if the supplier fails their joint audit. The second is the shared mechanism in which each buyer conducts audits independently, shares its audit reports with the other buyers, and imposes a collective penalty if the supplier fails any one of the audits. Using a simultaneous-move game-theoretic model with two buyers and one supplier, our analysis reveals that both the joint and the shared mechanisms are beneficial in several ways. First, when the wholesale price is exogenously given, we establish the following analytical results for the joint mechanism in comparison with the independent mechanism: (a) the supplier's compliance level is higher; (b) the supplier's profit is lower while the buyers' profits are higher; and (c) when the buyers' damage cost is high, the joint audit mechanism creates supply chain value so the buyers can offer an appropriate transfer payment to make the supplier better off. Second, for the shared audit mechanism, we establish similar results but under more restrictive conditions. Finally, when the wholesale price is endogenously determined by the buyers, our numerical analysis shows that the key results continue to hold.

  Link(s) to publication:

  http://dx.doi.org/10.1287/msom.2017.0653

• Chintapalli, P.; Disney, S. M.; Tang, C. S., 2017, "Coordinating Supply Chains via Advance-Order Discounts, Minimum Order Quantities, and Delegations", Production And Operations Management, December 26(12): 2175 - 2186.
  Abstract: To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre-established price, we examine whether the supplier should offer advance-order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance-order discount contract is Pareto-improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre-specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance-order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first-best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto-improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one-supplier-one-manufacturer case continue to hold when we have two manufacturers.

  Link(s) to publication:

  http://dx.doi.org/10.1111/poms.12751

• Chintapalli, P.; Hazra, J., 2016, "Stocking and quality decisions for deteriorating perishable products under competition", Journal Of The Operational Research Society, April 67(4): 593 - 603.
  Abstract: In this study, we address the joint inventory and quality management in a Cournot duopoly, for a seasonally produced, perishable product whose quality deteriorates over time. The sales of the product occur over two periods, namely the season (first period) and the off-season (second period). Apart from the stocking quantities for the two periods, firms must decide the quality levels of the units to stock for the second selling period. Firms incur a cost to maintain particular quality levels. The equilibrium policies of the firms are characterized, and we discuss the impact of the firms' quality costs on their inventory and quality decisions. We identify the conditions of the quality costs when competition ceases to exist in the second period, and analyse the impact of the quality costs on inter-temporal price fluctuations and product availability. Using the unconstrained equilibrium policy, we frame the firms' inventory disposal policies when production yields are exogenous.

  Link(s) to publication:

  http://dx.doi.org/10.1057/jors.2015.80

• Chintapalli, P., 2015, "Simultaneous pricing and inventory management of deteriorating perishable products", Annals Of Operations Research, June 229(1): 287 - 301.
  Abstract: This study addresses the problem of combined pricing and inventory control in the context of perishable goods—specifically, when demand is uncertain and price-sensitive and the consumers are free to choose between new and old units, based on the relative affordability of prices. First, the problem is formulated as a periodic review problem for a product with finite arbitrary lifetime and a myopic policy, which is often followed in practice, is discussed. Analytically it is shown that the solution obtained by the policy is also the unique solution that maximizes the individual profits from the inventories at each age. Next, this study addresses a special case—that of products with two-period lifetime, which is a scenario of practical importance. It is proven that under the policy of discounts and sticky pricing, which is often practiced in the brick-and-mortar retail stores, the myopic policy is in fact the steady-state optimal policy of the infinite-horizon problem.The study concludes with a numerical example and directions for future research in the area of joint pricing and inventory management of deteriorating, perishable products.

  Link(s) to publication:

  http://dx.doi.org/10.1007/s10479-014-1753-9

• Chintapalli, P.; Hazra, J., 2015, "Pricing and inventory management during new product introduction when shortage creates hype", Naval Research Logistics, June 62(4): 304 - 320.
  Abstract: In this study, we analyze the joint pricing and inventory management during new product introduction when product shortage creates additional demand due to hype. We develop a two-period model in which a firm launches its product at the beginning of the first period, before it observes sales in the two periods. The product is successful with an exogenous probability, or unsuccessful with the complementary probability. The hype in the second period is observed only when the product is successful. The firm learns the actual status of the product only after observing the first-period demand. The firm must decide the stocking level and price of the product jointly at the beginning of each of the two periods. In this article, we derive some structural properties of the optimal prices and inventory levels, and show that (i) firms do not always exploit hype, (ii) firms do not always increase the price of a successful product in the second period, (iii) firms may price out an unsuccessful product in the first period if the success probability is above a threshold, and (iv) such a threshold probability is decreasing in the first-period market potential of the successful product.

  Link(s) to publication:

  http://dx.doi.org/10.1002/nav.21629

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