Every year, companies that produce consumer tax preparation software struggle with a massive amount of work imposed by thousands of state and federal changes to tax laws and forms. With their release not even beginning before August, these changes still must be processed and incorporated into the application by mid- December. Three companies dominate this competitive market with its short selling season so that release delays create significant losses. Though systematic resource allocation and process management are crucial, the volume and complexity of the changes, the brief timeframe to implement them, and feedback loops built into the system for error resolution make it extremely difficult to analyze the process. One of the leading tax software providers tasked us with developing systematic approaches for managing the process flow and staffing each stage so that the company met the deadline at the lowest cost. Based on the characteristics of the process, we develop deterministic models that partition tax forms into groups and determine the staffing levels for each group. Partitioning the development process into groups has the benefit of simplifying workflow management and making it easier to find staffing levels. To provide the company with a range of resource configurations, we use two modeling approaches to obtain lower and upper bounds on the number of resources at each stage. Numerical experiments indicate that the models successfully capture the features of the process and the heuristics perform well. Implementing our models at the company has resulted in 31% reduction in overtime and 13% reduction in total resource costs.

Gray markets, also known as parallel imports, are marketplaces for trading genuine products that are diverted from authorized distribution channels. They have created fierce competition for manufacturers in many industries and each year billions of dollars worth of products are traded in these markets. Using a game-theoretic model, we analyze the impact of parallel importation on a price-setting manufacturer that serves two markets with uncertain demand. We characterize the optimal joint price and quantity decisions of the manufacturer which determine whether the manufacturer should ignore, block, or allow parallel importation. We also show that parallel importation forces the manufacturer to reduce her price gap while demand uncertainty forces her to lower prices in both markets. Moreover, we observe that parallel importation may force the manufacturer to exit the low-profit market. Through extensive numerical experiments, we explore the impact of market conditions (size and price elasticity) and product characteristics (a fashion item or a commodity) on the manufacturer's reaction to parallel importation. In addition, we provide interesting insights about the value of strategic pricing for coping with gray markets versus the uniform pricing policy that has been adopted by some companies to eliminate gray markets.

This paper introduces a new generalized version of the Traveling Salesman Problem (TSP) in which nodes belong to various color classes and each color class must be visited as an entity. We distinguish the cases of the problem for which the colors are either pre-assigned or can be selected from a given subset of colors. We establish computational complexity and provide concise formulations for the problems that lend themselves to derive tight lower bounds. Exact solutions for special cases and a two-phase heuristic for the general case are provided. Worst case performance and asymptotic performance of the heuristic are analyzed and the effectiveness of the proposed heuristic in solving large industrial size problems is empirically demonstrated.

Diverting large quantities of goods from authorized distribution channels to unauthorized or �gray market� channels, albeit legal, significantly affects both firms and consumers due to effects on price, revenue, service and warranty availability, and product availability. In this paper we consider mechanisms by which the uncertainty surrounding inventory ordering decisions drives gray markets. We start with a minimal stochastic supply chain model composed of a producer and a retailer; then we restructure the model to add a distributor whereby the distributor and authorized retailer have the option of diverting inventory to a gray market. Our analysis sheds light on three issues: impacts of diversion on the various supply chain participants, strategies producers could use to combat or exploit gray markets, and important considerations for authorized retailers trying to set optimal order quantities in the presence of a gray market. Our analysis yields new insights into the behavior and impact of gray markets, which can inform management strategies and policies for confronting them.