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Behavioral operations management, or simply behavioral operations (BOps), aims at understanding the decision‐making of managers and at using this understanding to generate interventions that improve the operation of the supply chain. To do so, BOps imports knowledge from a number of fields such as economics, psychology and other social and behavioral sciences. We point out a blind spot in this knowledge: In BOps, the heuristics that people use are typically, although not always, viewed as a liability. The issue with this view is that it does not explain when and in what way heuristics can be an asset. We propose, as a research program for BOps, uncovering the conditions under which the heuristics that supply chain managers use are an asset, as well as the conditions under which they are a liability. We briefly discuss some research on heuristics in BOps and show how the study of quantitative models of heuristics can complement it.

We use a behavioral laboratory experiment to study how agents with reputation concerns select the difficulty of their tasks. Drawing upon existing theory, we subjected participants in our study to a context in which they had to convince a principal of their capability to reap financial benefits. Our results show that participants tended to increase the difficulty of their task to enhance their reputation. In addition, we provide evidence that performance rewards reduce a less capable agent's tendency to choose a more difficult task, whereas a highly capable agent's pattern of choices is unaffected by performance rewards. Although the productivity of agents in our experiment therefore decreased if they had to convince a principal of their capability, we show that these detrimental performance implications can to some degree be overcome for less capable agents through performance rewards or by ensuring that the principal can interpret the agent's choice. This paper was accepted by Christoph Loch, R&D and product development.

In this paper, we investigate whether and how the presence of remanufactured products and the identity of the remanufacturer influence the perceived value of new products through a series of behavioral experiments. Our results demonstrate that the presence of products remanufactured and sold by the original equipment manufacturer (OEM) can reduce the perceived value of new products by up to 8%. However, the presence of third-party-remanufactured products can increase the perceived value of new products by up to 7%. These results suggest that deterring third-party competition via preemptive remanufacturing may reduce profits, whereas the presence of third-party competition may actually be beneficial for an OEM. This paper was accepted by Serguei Netessine, operations management.

We conduct three behavioral laboratory experiments to compare newsvendor order decisions placed directly to order decisions submitted in a decomposed way by soliciting point forecasts, uncertainty estimates, and service-level decisions. Decomposing order decisions in such a way often follows from organizational structure and can lead to performance improvements compared with ordering directly. However, we also demonstrate that if the critical ratio is below 50%, or if the underlying demand uncertainty is too high, task decomposition may not be preferred to direct ordering. Under such conditions, decision makers are prone to set service levels too high or to suffer from excessive random judgment error, which reduces the efficacy of task decomposition. We further demonstrate that if accompanied by decision support in the form of suggested quantities, task decomposition becomes the better-performing approach to newsvendor decision making more generally. Decision support and task decomposition therefore appear as complementary methods to improve decision performance in the newsvendor context. This paper was accepted by Serguei Netessine, operations management .

We examine a large operational data set in a casual restaurant setting to study how coworkers’ sales ability level affects other workers’ sales performance. We find that waiters react nonlinearly to their coworkers’ ability. In particular, when coworkers’ overall sales ability is low, increasing this ability may prompt waiters to redouble both upselling and cross-selling efforts. When overall coworkers’ ability is high, however, further increasing their ability may trigger waiters to reduce sales efforts. Our empirical findings imply that, to maximize sales, managers should mix waiters with heterogeneous ability levels during the same shift. Through a counterfactual analysis, we find that considering the inverted U-shaped peer effects when optimizing current waiters’ schedules without changing their utilization may increase total sales by approximately 2.48% at no extra cost. This paper was accepted by Vishal Gaur, operations management.

This paper investigates the relationship between waiting time and subsequent purchase decisions. The prior literature assumes that purchase decisions are independent from the waiting time. By contrast, we find that when people spend a longer time waiting in a line, they tend to consume more. We identify mental accounting for sunk costs as the underlying mechanism that drives this behavior; a larger purchase allows customers to offset the long wait suffered. Finally, we explore the effect of managerial practices commonly employed by firms to improve customers’ waiting experience. We find that although these practices indeed result in improved customer experience, they can actually result in lower consumption at the individual level. This paper was accepted by Vishal Gaur, operations management.

We analyze a large, detailed operational data set from a restaurant chain to shed new light on how workload (defined as the number of tables or diners that a server simultaneously handles) affects servers' performance (measured as sales and meal duration). We use an exogenous shock-the implementation of labor scheduling software-and time-lagged instrumental variables to disentangle the endogeneity between demand and supply in this setting. We show that servers strive to maximize sales and speed efforts simultaneously, depending on the relative values of sales and speed. As a result, we find that, when the overall workload is small, servers expend more and more sales efforts with the increase in workload at a cost of slower service speed. However, above a certain workload threshold, servers start to reduce their sales efforts and work more promptly with the further rise in workload. In the focal restaurant chain, we find that this saturation point is currently not reached and, counterintuitively, the chain can reduce the staffing level and achieve both significantly higher sales (an estimated 3% increase) and lower labor costs (an estimated 17% decrease). This paper was accepted by Noah Gans, special issue on business analytics .

PurposeThe success of a supply chain is highly reliant on effective inventory and ordering decisions. This paper systematically reviews and analyzes the literature on inventory ordering decisions conducted using behavioral experiments to inform the state-of-the-art.Design/methodology/approachThis paper presents the first systematic review of this literature. We systematically identify a body of 101 papers from an initial pool of over 12,000.FindingsExtant literature and industry observations posit that decision makers often deviate from optimal ordering behavior prescribed by the quantitative models. Such deviations are often accompanied by excessive inventory costs and/or lost sales. Understanding how humans make inventory decisions is paramount to minimize the associated consequences. To address this, the field of behavioral operations management has produced a rich body of research on inventory decision-making using behavioral experiments. Our analysis identifies primary research clusters, summarizes key learnings and highlights opportunities for future research in this critical decision-making area.Practical implicationsThe findings will have a significant impact on future research on behavioral inventory ordering decisions while informing practitioners to reach better ordering decisions.Originality/valuePrevious systematic reviews have explored behavioral operations broadly or its subdisciplines such as judgmental forecasting. This paper presents a systematic review that specifically investigates the state-of-the-art of inventory ordering decisions using behavioral experiments.

Work scheduling research typically prescribes task sequences implemented by managers. Yet employees often have discretion to deviate from their prescribed sequence. Using data from 2.4 million radiological diagnoses, we find that doctors prioritize similar tasks (batching) and those tasks they expect to complete faster (shortest expected processing time). Moreover, they exercise more discretion as they accumulate experience. Exploiting random assignment of tasks to doctors’ queues, instrumental variable models reveal that these deviations erode productivity. This productivity decline lessens as doctors learn from experience. Prioritizing the shortest tasks is particularly detrimental to productivity. Actively grouping similar tasks also reduces productivity, in stark contrast to productivity gains from exogenous grouping, indicating deviation costs outweigh benefits from repetition. By analyzing task completion times, our work highlights the trade-offs between the time required to exercise discretion and the potential gains from doing so, which has implications for how discretion over scheduling should be delegated. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2810 . This paper was accepted by Serguei Netessine, operations management.

Many models in operations management involve dynamic decision making that assumes optimal updating in response to information revelation. However, behavioral theory suggests that rather than updating their beliefs, individuals may persevere in their prior beliefs. In particular, we examine how individuals’ prior experiences and the experiences of those around them alter their belief perseverance in operational decisions after the revelation of negative news. We draw on an exogenous announcement of negative news by the Food and Drug Administration and explore how it affects interventional cardiologists deciding between two types of cardiac stents. Analyzing 147,000 choices over six years, we find that individuals do respond to negative news by using the focal production tool less often. However, we find that both individuals’ own experiences and others’ experiences alter their responses. Moreover, although individual and other experience act as substitutes before negative news, we find that this substitution significantly curtails following the negative announcement. Finally, we find that experience leads doctors to discount negative news more rapidly over time. Two lab studies replicate our main findings and show that behavioral biases due to differences in perceptions of expertise drive the effect. Our research contributes not only to operations research but also to the practice of healthcare and operations. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2640 . This paper was accepted by Serguei Netessine, operations management.