A Bilevel Programming Approach to Design Intervention Schemes
Ece Demirci, Department of Industrial Engineering, TED University

Abstract

Public-interest goods, which are also referred to as goods with positive externalities, generate benefits to individual consumers as well as non-paying third parties. Some significant examples include health related products such as vaccines and products with less carbon emissions. When positive externalities exist, the good may be under-produced or under-supplied due to incorrect pricing policies or failing to value external benefits and that is why a need for intervention arises. A central authority such as government or social planner intervenes into the system of these goods so that their adoption levels are increased towards socially desirable levels. The central authority seeks to design and finance an intervention strategy that will impact the decisions of the channel in line with the good of the society, specified as social welfare. A key issue in designing an intervention mechanism is choosing the intervention tools to incorporate. The intervention tools can target the supply or demand of the good. One option for the intervention tool is investment in demand-increasing strategies, which affects the level of stochastic demand in the market. Second option is investment in strategies that will improve supply of the good. We introduce and analyze social welfare maximization models with the emphasis on optimal budget allocation. This talk will focus on two examples of intervention scheme design together with their verification on real life case studies.

Short Bio

Ece Zeliha Demirci is an Assistant Professor at TED University, Department of Industrial Engineering. Prior to her current position, she was a Postdoctoral Researcher at the Industrial Engineering and Innovation Sciences Department of Eindhoven University of Technology between November 2016 and August 2019. She received her Ph.D. degree from Industrial Engineering Department of Bilkent University, in 2016. She earned her B.S. and M.S. degrees from the same department in 2007 and 2009, respectively. Her research interests include supply chain management, sustainable operations, inventory theory, and spare parts planning.

Venue

Friday, December 13, 2019 at 4.00 pm in IE 03