- Professor Fred R. Sullivan
- Professor of Operations, Information and Decisions
- Professor of Marketing
- First email:
cachon@wharton.upenn.edu
- Office address:
Rua walnut 3730
543 Jon M Huntsman Corridor
Philadelphia, PA 19104
Research Interests:Operational strategy, pricing, supply chain management, sustainability
Links:CV,Personal website
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overview
Professor Cachon studies supply chain management, operational strategy and pricing with a focus on how technology is changing competitive dynamics and enabling new operational strategies.
He is a Fellow of INFORMS, Fellow and Past President of the Manufacturing and Services Operations Management Society, and Past Editor-in-Chief ofmanagement sciencesas much asManufacturing and service operations management.
He is the author of two textbooks (with Christian Terwiesch): Operations Management (2e) and Matching Supply with Demand: An Introduction to Operations Management (4e). These books have been used in undergraduate, MBA, and executive MBA courses at Wharton, as well as many other business schools around the world.
His articles appeared inmanagement sciences,Manufacturing and service operations management,marketing science,Operational research, aquarterly business magazine, Sheharvard annual report,between others
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Gérard Cachón,Tolga Dizdarer,Gerry Tsoukalas(Work),Price control and regulation in online service platforms.
Summary:Online service platforms allow customers to connect to large numbers of independent servers and thrive in many industries including transportation, hosting, delivery and more. We examine how prices are chosen and fees are charged on the platform. The platform can exercise full control over pricing despite a lack of knowledge of server costs (e.g. ridesharing). Or the platform allows unrestricted price competition between servers (e.g. hosting). This choice affects both the amount of supply available and the overall appeal of the platform to consumers. When the platform collects revenue through a commission or unit fee, no one pricing strategy dominates the other. However, the best payout structure on the platform is simple and easy to implement: it's simply a combination of a commission and a per-unit fee (which, like a subsidy, can be negative). Additionally, this combination allows price control to be delegated to the servers, which can help classify the servers as outsourced rather than staffed. A similar approach can be used to maximize profits through fully disintermediated (i.e. no central ownership) platforms such as those enabled by blockchain technology.
Gérard Cachónand Dawson Kaaua (working),Serving Democracy: Evidence of Differences in Florida's Voting Resources.
Gérard Cachónand Dawson Kaaua (working),Democracy at stake: Polling station closures and their estimated impact on wait times in Georgia's 2016 presidential election.
Gérard CachónjChristian Terwiesch,manager(Mc Graw Hill, 2019)
Gérard Cachón,Santiago Galino, Jiaqi (José) Xu,Free Shipping Isn't Free: A Data-Driven Model for Designing Free Shipping Threshold Policies.
See AlsoBusiness success depends on successful marketingThe Definitive Guide to Marketing Information Management | He writesSECTION 8: PRODUCT/SERVICES AND QUALITYWhat are the branches of business administration? - business.comSummary:Online retailers often offer free shipping policies: customers who purchase more than a threshold pay no additional shipping costs. This document provides a data-driven analysis model to (i) assess the profitability of a retailer's current limit shipping policy and (ii) determine the best free shipping limit policy for a retailer. The model is estimated using actual transactions and product return data. The model explicitly accounts for changes in customer purchasing behavior due to a free shipping threshold, including strategically adding items to a shopping cart to receive free shipping, what we refer to as order replenishment, and then adjusting product return decisions. . In general, according to our model, a retailer that offers a free shipping threshold policy should set the threshold slightly above the average cart value. We calibrated our model with data from an online clothing retailer and found that its decision to offer a lower free shipping threshold significantly reduced its profitability. This result is robust to a number of assumptions regarding the impact on long-term sales and potential pricing adjustments. We conclude that policies limiting free shipping are only cost-effective under a limited set of restrictive conditions.
Gérard Cachón,Santiago Galino,Marcelo Olivares(2018),Does adding inventory increase sales? Evidence of a scarcity effect at US car dealerships.,management sciences.
Summary:What is the relationship between inventory and sales? Of course, inventory can increase sales - increasing inventory creates more options (choice, colors, etc.) and can signal a popular/desirable product. Or inventory may encourage a consumer to continue their search (e.g., on the theory that if nothing better is found they might return), thereby reducing sales (a scarcity effect). We tried to identify this impact on US auto sales. Our main research challenge is the endogenous relationship between inventory and sales, for example retailers influence their inventory levels in anticipation of demand. Therefore, our estimation strategy relies on weather disturbances in upstream manufacturing facilities to generate exogenous fluctuations in the downstream dealer inventory. We have found that the impact of adding a specific vehicle model to a dealer's lot depends on the cars that dealer already owns. If the added vehicle expands the set of available sub-models (e.g. adding a four-door to an all-two-door), sales will increase. But if the added vehicle is the same sub-model as an existing vehicle, sales actually go down. Therefore, expanding diversity across sub-models should be the first priority when adding inventory; Adding inventory within a submodel is really detrimental. Given the way vehicles were allocated to dealerships in practice, we found that increasing inventory actually reduced sales. However, our data indicates that implementing a “maximize variety, minimize duplication” allocation strategy can have a significant benefit: sales increase by 4.4% without changing the number of vehicles at each dealership and 5.2% are possible if stock is allowed to fall 2.8 percent (and no more than 10 percent at any retailer).
Gérard Cachón See my personal website (link above) for research papers (https://www.gerard-cachon.com).
to teach
Current courses (fall 2022)
OIDD9400 - Operations Management
Concepts, models and theories relevant to managing the processes required to deliver goods or services to consumers in both the public and private sectors. It includes functions for production, inventory and distribution, planning of service or manufacturing activities, planning and design of installation capacity, site analysis, product design and technology selection. The methodological basis of the course includes business administration, economic theory, organizational theory and management information system theory.
OIDD9400001 (to the syllable)
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OIDD1010 - Introduction to OIDD
OIDD 101 examines a variety of common quantitative modeling problems commonly encountered in business environments and discusses how they can be formally modeled and solved using a combination of business knowledge and computational tools. Key topics covered include capacity management, service operations, inventory control, structured decision making, constrained optimization, and simulation. In this course you will learn how to model complex business situations and master tools to improve business performance. The aim is to provide fundamental skills useful for future courses at Wharton, as well as to provide an overview of the topics and techniques that characterize the disciplines of information and operations management.
OIDD6150 - Operating Strategy
Operational strategy is about organizing people and resources to gain a competitive advantage in delivering products (goods and services) to customers. This course addresses this challenge from two main perspectives: 1) How should a company design its products so that they can be offered profitably; 2) how a company can best organize and source resources to deliver its product portfolio to customers. To make intelligent decisions about these high-level options, this course also provides a foundation in analytical methods. These methods provide students with a conceptual framework for understanding the connection between how a firm manages its supply and how well that supply matches the firm's resulting demand. Specific course topics include service systems design, managing inventory and product diversity, capacity planning, approaches to supplier and supply management, building global supply chains, sustainability of initiative management, and yield management. This course emphasizes quantitative tools and qualitative frameworks. None is more important than the other.
OIDD9400 - Operations Management
Concepts, models and theories relevant to managing the processes required to deliver goods or services to consumers in both the public and private sectors. It includes functions for production, inventory and distribution, planning of service or manufacturing activities, planning and design of installation capacity, site analysis, product design and technology selection. The methodological basis of the course includes business administration, economic theory, organizational theory and management information system theory.
Awards and Honors
- Member of INFORMA, 2015
- Rapaport Award for Excellence in Undergraduate Basic Education, 2013
- "Difficult, but I'll thank you in 5 years", 2012
- Member of Manufacturing and Service Operations Management Society, 2011
- Penn Fellow – One of six mid-career Penn faculty selected for this leadership development program in 2011
- Finalist M&SOM Best Paper Award 2010 für „In Search of the Bullwhip Effect“, 2010
- "Difficult, but thank you in 5 years" award, 2009
- MSOM Society Service Award, 2008
- Miller-Sherrerd Teaching Award: Awarded to the 8 teachers with the highest grades in teaching, 2004
- MSOM Meritorious Service Award, 2004
- Tough, but I'll thank you in 5 years", verliehen von der Wharton Graduate Student Association, 2002
- "Fuqua School of Business" Daimler-Chrysler Teaching Award for Innovation and Excellence in a Elective Course, 1999
In the news
Knowledge at Wharton
- Do long waiting times endanger democracy?, Knowledge at Wharton - 06/26/2020
- Amazon under fire: likely antitrust action?, Knowledge at Wharton - 4/9/2018
- Frustrated by rising prices? See how it will benefit you in the long term., Knowledge at Wharton - 5/1/2016
- The downside of bad weather: increased productivity, Knowledge at Wharton - 01/29/2015
- With China, the global supply chains are also changing, Knowledge at Wharton - 07/22/2013
- Chinese supply chains reach 'tipping point' as multinationals reassess strategies, Knowledge at Wharton - 07/17/2013
- A "carrot and stick" approach to dealing with lost bookings, Knowledge at Wharton - 5/6/2013
- Did you ignore your restaurant reservation? That's $200, please, Knowledge at Wharton - 5/6/2013
- Prevent more tragedies in Bangladesh, Knowledge at Wharton - 05/15/2013
- Is PC death imminent?, Knowledge at Wharton - 04/23/2013
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Gérard Cachón,Tolga Dizdarer,Gerry Tsoukalas(Work),Price control and regulation in online service platforms.
the whole investigation
In the news
Do long waiting times endanger democracy?
Wharton's Gerard Cachon research examines how operational management principles can help explain voter behavior and strengthen democracy.…see more information
Knowledge at Wharton - 06/26/2020
all the news
Wharton-Magazin
Data: Vote Wait Times, Pre-IPO Confidentiality, and More
Wharton Magazine - 16.10.2020