Festive Scenes from Boston

Wherever you may be during this peaceful, yet, festive, time of the year, the wonder of this season makes it truly special.

Being a resident of Massachusetts, albeit the more rural western part, I never miss an opportunity to travel and to see other sights. Much of my travel is work-related, which I do enjoy immensely.

Yesterday, my family and I were in Boston, not for work, but to experience the celebratory atmosphere at this time of the year and to see some friends.

Above are some photos taken yesterday in Boston that capture the serenity and spirit from Quincy Marketplace to Faneuil Hall, the State House with its gold dome, and the skaters on the Boston Common.

Amazing not to have snow as a blanket but green grass instead.

Even the geese seem to be having second thoughts about migrating south.

Beware -- Why the European Union Cap and Trade Aviation Emission System May Lead Paradoxically to More Carbon Emissions

As families are set to gather for the holidays and to celebrate the New 2012 Year, and this may include taking planes, trains, or automobiles to reach the desired destinations, the European Union's (EU's) highest court in Luxembourg has approved the European Union's cap and trade system for aviation, which is to officially be put into practice on January 1, 2012. This news was reported in The New York Times.

According to the article in The Times: The European initiative involves folding aviation into the six-year-old emissions trading system, in which polluters can buy and sell a limited quantity of permits, each representing a ton of carbon dioxide. The legislation requires that airlines account for their emissions for the entirety of any flight that takes off from — or lands at — any airport in the bloc.

The goal, European officials have said, is to speed up the adoption of greener technologies at a time when air traffic, which represents about 3 percent of global carbon dioxide emissions, is growing much faster than gains in efficiency.

I have done research on emission permit trading systems in a series of papers focused not only on reducing pollution of firms but also in transportation. Some of the latter research was done with my former doctoral students, Padma Ramanujam and Kathy Dhanda. Padma, who now works at SAS, in Raleigh, North Carolina, received the Transportation Science Section of INFORMS Dissertation Prize in 1999 for her doctoral dissertation, "Transportation Network Policy Modeling for Congestion and Pollution Control: A Variational Inequality Approach."

I have also published papers that one needs to be careful in designing and implementing transportation pollution and congestion abatement policies since if the entire network and user behavior are not captured then the policies may have paradoxical outcomes! One paper that I wrote on the topic is, "Congested urban transportation networks and emission paradoxes," which was published in Transportation Research D and another, joint with June Dong, was "Paradoxes in networks with zero emission links: Implications for telecommunications versus transportation," which was also published in Transportation Research D.

In fact, the major theme of my Sustainable Transportation Networks book, published in 2000, was how to capture rigorously policies for pollution reduction in transportation systems, including the use of cap and trade systems.

Consider now about the following scenario: Suppose that you are a global logistics company and your goal is to minimize total costs and to route your planes and cargo accordingly. If it will cost you more to transport the cargo from Asia directly to Europe because of the "price" imposed on emissions generated you may decide to stop midway and then to proceed, knowing that you will just be charged for the emissions generated on the flight leg (the last one) that ends up in Europe.

The Wall Street Journal in its Wednesday, December 21, 2011 edition has an article that illustrates precisely the above strategy. The article, "UPS weighs EU flyaround," complete with a map, discusses how UPS may add stopovers on cargo flights to Europe in hopes of reducing EU charges for excess carbon emissions. Rather than flying from Hong Kong to Cologne directly, a current route of about 5,700 miles, flights would land in Mumbai, and then head for Cologne, Germany, a proposed alternate route of 6,800 miles, and one with obviously greater emissions not only because of the distance traveled but the increase in the number of takeoffs and landings! But, UPS would reduce the cost of the tax by about a quarter because it could only be charged for the distance flown from Mumbai to Cologne.

I have images of cargo planes being flown just to the border of the European Union, landing, and then taking off again.

The Times article did not capture the above major issue and it is clearly an environmental (and business) one, but The Wall Street Journal article did so and did it brilliantly.

Risk Reduction and Cost Synergy via Supply Chain Network Integration

Nothing like waking up and having a message from a publisher that the galleys of your paper are ready for proofing.

Plus, when there are no changes needed, and the paper looks great, it makes it all even sweeter.

This morning, my co-author, Dr. Zugang "Leo" Liu, and I were delighted to experience the above and our paper, Risk Reduction and Cost Synergy in Mergers and Acquisitions via Supply Chain Network Integration, is the lead paper in the December 2011 issue of the Journal of Financial Decision Making and appears in volume 7(2), (2011), pp 1-18.

I had blogged about our research on which this paper is based in a post: Supply Chain Risk, Mergers and Acquisitions, and Synergy.

In this paper, we developed a network model that captures the costs and the risks associated not only with the production, transportation, and storage activities in supply chains, but also with the merger / acquisition (M&A) itself. The framework allows one to estimate the expected total cost and the total risk of the supply chains before and after the merger. In addition, we provided three synergy measures that can assist decision-makers in the evaluation of potential gains of M&As from different perspectives. The measures are: the expected total cost synergy, the absolute risk synergy, and the relative risk synergy.

The first measure quantifies the expected total cost savings obtained by the merger; the second measure represents the reduction of the absolute risk achieved through the merger, and the third measure reflects the reduction of the relative risk through the merger.

Our results provide interesting managerial insights for executives who are faced with M&A decisions. The first set of examples showed that, if the expected total costs and the risks of the merger are negligible, both the total cost and the total risk would be reduced through the merger. In addition, the risk reduction achieved through the merger was more prominent when the uncertainty of link costs was higher. Our second set of examples showed that the cost and the risk of merger could have a significant impact on the total cost and the total risk of the post-merger firm, and should be carefully evaluated. Our examples also demonstrated that whether a merger makes sense economically may depend on the priority concerns of the decision-makers, and on the measures used to evaluate the gains. For instance, a merger that could not lower the expected total cost might still be able to reduce the total risk, and, hence, may be considered beneficial to the firms' stakeholders.

With all the articles appearing recently in The Wall Street Journal on Mergers & Acquisitions (horizontal as well as vertical) it is exciting to be doing research that is both interesting and timely and that includes networks applied in new ways!

My Humanitarian Healthcare Hero -- Dr. Daniel Clapp

He was standing in our driveway holding a plate on which was an exquisite Scandinavian sweetbread and watching us decorating our Christmas tree.

He had been watching for awhile.

I glanced out our bay window and saw Dr. Dan Clapp, our neighbor, wearing a UMass Amherst jacket and smiling at us.

We invited Dr. Clapp in, and thanked him for the Scandinavian sweetbread that has become a tradition in our house on Christmas morning after the gifts are unwrapped.

I told Dr. Clapp that I had promised my students to broach the cutbacks at the University Health Services (UHS) to him to see what could be done and he mentioned, in his humble way, that he would be interviewed by a reporter, Scott Merzbach, soon and we could proceed from there. He and I agreed that health of our communities (students, faculty, staff, and neighbors) should always be a top priority.

He did not state the reason for the interview and that was that he is the recipient of the 2011 Andrus Award for Community Service given to an individual in each state by the AARP. Dr. Clapp is the winner out of 26 nominees in the state of Massachusetts. The coverage has now hit the media with articles in our local papers (the Daily Hampshire Gazette and The Amherst Bulletin) and beyond.

Dr. Clapp had worked at the UMass Amherst University Health Services for 32 years and considered it, at that time, as a model university health center. Since "retiring" in 2002, and throughout his professional career, his volunteer work would make someone half his age (he is now 75) panting for breath.

In 1964, he and his wife, Solveig, moved to the Philippines to work as missionaries at an orphanage where he treated patients suffering from malnutrition and other illnesses that affect those living in poverty. They stayed there for a year, and, after assuming his position at UHS, he and his wife would return every few years for a month to the Philippines. While in the Philippines, he also was a field agent for the Pathfinder Fund of Boston, which focuses of female reproductive health services.

Dr. Clapp's volunteer activities have included Meals on Wheels, starting a free clinic in the community, which serves 300 patients, many homeless and without health insurance. He is Chairman of the Council on Aging in Amherst, an on-call physician at the Westover Air Reserve Base in Chicopee, where he does examinations of military recruits, and is the physician for the Senior Health Services Nursing Center at the Amherst Senior Center, to name just a few of his volunteer healthcare and humanitarian activities.

He is also a great supporter of UMass Amherst women sports teams and plays the trumpet in the Oompah Band that I have heard play at many festive community occasions and events.

Dr. Clapp was nominated for the Andrus Award for Community Service by Nancy Pagano, the Senior Center Director in Amherst, who according to the wonderful front page article in the December 23, 2011 edition of the Amherst Bulletin by Scott Merzbach, said "the award recognizes a man who doesn't seek attention. His modesty is his cloak as he moves quietly and reliably serving those in need."

Dr. Clapp, you are our hero. Thank you for considering me to be your friend.

You are an inspiration and role model for us all.

Sustainable Fashion Supply Chain Management Using Game Theory

Does one ever get tired of doing research and publishing?

I know that I certainly haven't, and recently marked what seems like a milestone, at least to me -- and now have over 150 of my articles published in refereed journals.

I do research and write (as well as teach) because I love what I do and solving tough problems is not only challenging but also satisfying (once you figure out the solution).

I received the digital offprint of our latest paper, "Sustainable Fashion Supply Chain Management Under Oligopolistic Competition and Brand Differentiation," joint with Min Yu, which has now been published in a special collection in the International Journal of Production Economics on Green Manufacturing and Distribution in the Fashion and Apparel Industries. The guest editors are: Tsan-Ming Choi, Chris K.Y. Lo, Christina W.Y. Wong, Rachel W.Y. Yee.

Seeing an article that we worked hard on in print is always thrilling.

The fashion supply chain management paper is part of a body of work that we have completed on sustainability and network themes. The fashion and apparel industry is facing vast challenges in terms
of environmental issues and has some unique features, which made it very interesting from a mathematical modeling point of view.

According to the Natural Resources Defense Council (NRDC), textile manufacturing pollutes as much as 200 tons of water per ton of fabric. In China, a textile factory may also burn about 7 tons of carbon emitting coal per ton of fabric produced. Polyester is a man-made fiber whose demand from the fashion industry has doubled in the past 15 years and its manufacture requires petroleum and releases emissions into the air and the water. The production of cotton accounts for a quarter of all the pesticides used in the United States, which is the largest exporter of cotton in the world.


In the last three decades, there has been a migration of clothing manufacturers from developed to developing countries. Whereas in 1992 about 49% of all retail apparel sold in the United States was actually made here, by 1999 the proportion had fallen to just 12%. Between 1990 and 2000, the value of apparel imports to the
US increased from $25 billion to $64 billion.

However, lower production costs are not the only reason for the globalization of apparel manufacturing. Some firms may be taking advantage of a looser environmental regulatory system and/or lower environmental impact awareness in developing nations.

Given the global dimensions, it is crucial to quantify the emissions generated along the entire supply chains associated with the fashion and apparel industry, including the emissions generated in the transportation and distribution of the products across oceans and vast tracts of land.

Increasingly, the pressure to minimize the environmental pollution is coming not only from consumers but, more recently, even from fashion firms that wish to enhance or to maintain a positive brand identity. For example, H&M identified that 51% of its carbon imprint in 2009 was due to transportation. In order to reduce the associated emissions, the company began more direct shipments that avoided intermediate warehouses, decreased the volumes shipped by ocean and air by 40%, and increased the volume of products shipped by rail -- a quite impressive achievement.



In our sustainable fashion supply chain management paper, we used game theory to develop a new model of oligopolistic competition for fashion supply chains in the case of differentiated products with the inclusion of environmental concerns. The model assumes that each fashion firm’s product is distinct by brand and the firms compete until an equilibrium is achieved. Each fashion firm seeks to maximize its profits as well as to minimize its emissions throughout its supply chain with the latter criterion being weighted in an individual manner by each firm.

The competitive supply chain model is network-based and variational inequality theory is utilized for the formulation of the governing Nash equilibrium as well as for the solution of the case study examples. The model and computational scheme can be applied to explore the effects of changes in the demand functions; in the total cost and total emission functions, as well as in the weights associated with the environmental emissions.

Fashion and apparel can be beautiful and it is important that its production and transportation does not mire the beauty and sustainability of the environment.

The Anonymous $350 Million Donor is Revealed and It Is a Cornell Alum

He always flies coach. He does not own a house and his watch cost $15.

The mystery man who gave $350 million to Cornell to support the new science center that it was awarded yesterday by Mayor Bloomberg of NYC, in partnership with Technion of Israel, has now been revealed.

The magnanimous donor is a Cornell University alum, who graduated from its School of Hotel Management in 1956.

His name is Mr. Charles F. Feeney, and The New York Times has a wonderful article on him and his generosity and vision. He views this initiative as transformational and I concur.

According to The Times, Cornell and Technion promise to start offering classes next September in temporary space, and to complete 300,000 square feet of space on Roosevelt Island by 2017 and more than 2 million square feet by 2037. Plans call for about 280 faculty members and 2,500 students in master’s and doctoral programs, a larger contingent than the universities had proposed a few months ago.

The schools have also committed to training at least 200 teachers each year in science education.

The universities plan to organize the campus around three overlapping, shifting “hubs”: technologies for “connective media,” applicable to everything from finance to social media; health care industries; and sustainable development, chosen in part to mesh with the city’s existing strengths.

Now isn't the above something that one can get excited about?!

It's Official -- Congrats to Cornell and Technion!

Mayor Bloomberg of NYC has chosen Cornell University in partnership with Technion - Israel Institute of Technology to build a $2 billion graduate school of applied sciences it was just announced in The New York Times. Congrats to both institutions on this achievement that may spawn a Silicon Valley II in one of my favorite cities in the world.

According to Bloomberg, this project, to be constructed on Roosevelt Island will be transformative.

According to the article: The school, which will not be fully built for 30 years, calls for 2,000 students, 300 faculty members and two million square feet on a patch of city-owned land that now houses a little-known hospital. In addition, the universities are offering a $150 million fund for startups begun on the campus that remain in New York for three years.

There was some major drama surrounding this competition, since Stanford University, considered another top contender, pulled out last Friday and The Chronicle of Higher Education had a provocative article emailed out this morning, entitled, "Stanford's Dream of 'Silicon Valley II' Dissolves Into Angry Recrimination."

Best of luck to Cornell and Technion and a salute to Mayor Bloomberg for his promotion of science and engineering!

How exciting that Cornell’s plan calls for 500,000 square feet of public space and partnerships with the public school system, including math and science support for at least 10,000 students.

I very much enjoyed the quote of Cornell’s president, Dr. David J. Skorton, “This is a story of connectivity — of connectivity between people and their ideas, between researchers and business people, between students and their dreams.” “This is an exercise in inclusion and having all the ships rise in this fine city. New York City is positioned to become the new technological capital of the world.”

I have a fondness for Cornell having been there multiple times to give invited talks and I even served on the National Allocation Committee for the NSF Supercomputer Center there before it lost its funding. Last time I was at Cornell was this past summer.

I am sure that the champagne is flowing in Ithaca and in NYC.

You can read the press release here.