Faculty & Research

Nicole DeHoratius

Adjunct Professor of Operations Management

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5807 South Woodlawn Avenue
Chicago, IL 60637

Nicole DeHoratius is an expert in the management of retail operations. As a faculty member of the University of Chicago’s Booth School of Business, she has published in leading journals such as Management Science, Harvard Business Review, and California Management Review. The Manufacturing & Service Operations Management (MSOM) Society awarded her its Best Paper Award for her article "Retail Inventory Management When Records are Inaccurate" (coauthored with Adam Mersereau and Linus Schrage). Her industry projects include work with Fred Meyer, Hugo Boss, McDonald’s, Procter & Gamble, Staples, Target, Ulta Beauty, and Walmart. Nicole serves as the Past-President of the Production and Operations Management Society (POMS) College of Supply Chain Management and as an associate editor for MSOM and senior editor for POM.

Nicole received her D.B.A. from Harvard Business School, her M.Sc. from the University of Sussex as a Rotary Ambassadorial Scholar, and her A.B., magna cum laude, from Harvard College. She joined Chicago Booth in 2001 and since then has taught operations management, service operations, and supply chain management to executives in programs and companies around the globe.


2016 - 2017 Course Schedule

Number Name Quarter
40101 Supply Chain Strategy and Practice 2017 (Winter)
40801 Operations Management 2016 (Fall)
40810 Strategic Service Design and Delivery 2017 (Summer)

Research Activities

Supply chain management, retail operations, execution, product availability, vendor management, incentives, operations strategy, labor planning, customer satisfaction, consumer goods, operations management, emerging markets, executive development, operations strategy, apparel, Asia-Pacific.

Craig, N.  DeHoratius, N. and A. Raman.  The Impact of Supplier Inventory Service Level on Retailer Demand, forthcoming, M&SOM.

Goyal, S., Hardgrave, B., Aloysius, J., N. DeHoratius. The Effectiveness of RFID in Backroom and Sales Floor Inventory Management, forthcoming, International Journal of Logistics Management.

Craig, N., N. DeHoratius, N., Y. Jiang, D. Klabjan. 2015. Execution Quality: An Analysis of Fulfillment Errors in a Retail Distribution Center. Journal of Operations Management, 38: 25-40.

DeHoratius, N., D. Pajovic. 2015. Opportunities and Challenges for Engaging Merchants in the Protection of Retail Assets. Retail Industry Leaders Association.

DeHoratius, N., Z. Ton.  "The Role of Execution in Managing Product Availability", Retail Supply Chain Management, Chapter 4: 53-77; edited by N. Agrawal and S. Smith, Springer (2015).

DeHoratius, N., L. Rohrer "Seyfarth Lean: Transforming Legal Service Delivery at Seyfarth Shaw", Harvard Law School (2015).

DeHoratius, N. "Global Sourcing at Walmart", University of Chicago Booth School of Business (2014).

Barratt, M., N. DeHoratius. 2012. Retail Analytics and Behavioral Operations: A Recipe for Superior Performance. Cutter Consortium Data Insight & Social BI Executive Update, 12(13): 1-6.

DeHoratius, N., E. Rabinovich, "Field Research in Operations and Supply Chain Management," Journal of Operations Management (2011).

DeHoratius, N. "Inventory Record Inaccuracy in Retail Supply Chains," Wiley Encyclopedia of Operations Research and Management Science, edited by James J. Cochran (2011).

Aksin, Z., N. DeHoratius. "Introduction to the Special Issue: Teaching Services & Retail Operations Management," INFORMS Transactions on Education (2010).

For a listing of research publications, please visit the university library listing page.

Update: Execution Quality and Chargeback Penalties in Retail Supply Chains
Date Posted: Jun  22, 2017
Retailers procure inventory by placing purchase orders (POs) with suppliers. POs specify product price, quantity, quality, and delivery times as well as other aspects of the fulfillment process, such as bar code standards and placement, carton labeling requirements, and packaging format. Retailers expect suppliers to adhere to fulfillment terms to enable supply chain optimizations, e.g., automation and pack-by-store product flows. When servicing an order, a supplier may fail to adhere to the fulfillment terms, thus committing a fulfillment error and triggering a chargeback penalty. Chargebacks reduce supplier revenues, transferring billions of dollars from suppliers to retailers annually. We collect supplier compliance manuals from 111 retailers to characterize fulfillment errors and chargeback penalties in practice. We find that the majority of chargeback penalties listed by retailers pertain to execution quality: i.e., aspects of the fulfillment process beyond product price, ...
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Update: Fulfillment Errors and Chargeback Penalties in Retail Supply Chains
Date Posted: Jun  22, 2017
Retailers replenish inventory by placing purchase orders (POs) with suppliers. POs specify product order quantities and delivery times as well as many other aspects of the fulfillment process, such as bar code standards and placement, carton labeling requirements, hanger styles, and product packaging. Retailers expect suppliers to adhere to these fulfillment terms in order to optimize their supply chains, employ automation, or manage pack-by-store product flows. When fulfilling an order, a supplier may commit a fulfillment error, i.e., the supplier may fail to adhere to the specified terms. Although fulfillment errors are common, retailers can correct the majority of fulfillment errors through rework. Herein, we study the cost impact of correctable fulfillment errors. We demonstrate that the commonly used incentive to prevent fulfillment errors - chargebacks - do not impose penalties aligned with the true cost of fulfillment errors in this retail context. Overall, our research ...
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REVISION: Consistency and Recovery in Retail Supply Chains
Date Posted: Jun  21, 2017
Practitioners and researchers describe inventory service level with metrics that communicate the likelihood of demand fulfillment without considering the on-going capabilities of the supplier, e.g., in-stock and _ll rate. We develop a method for measuring inventory service level that incorporates such supplier capabilities, namely consistency (the ability of a supplier to fulfill orders repeatedly) and recovery (the ability of a supplier to fulfill orders after a lapse in service). Using data from two retail supply chains, we illustrate our approach. To demonstrate the impact of consistency and recovery on supply chain performance, we model a retailer purchasing from competing suppliers with different levels of consistency and recovery. The model incorporates the retailer's uncertainty about demand and the retailer's uncertainty about its suppliers' service levels. We characterize how the retailer's orders and profitability change with a supplier's delivery performance through ...

REVISION: Modeling the Behavior of Patients Who Leave the ED Without Being Seen
Date Posted: Feb  24, 2016
Abandonment in queues has long been recognized as having a significant impact on system performance. Nevertheless, our empirical understanding of the key drivers for abandonment, particularly in observable systems, is limited. Most models of abandonment assume that it occurs after a length of time sampled from an exogenous distribution, with no dependence on the system. However, discrete-event simulation, a commonly used tool for decision making in service systems, permits much more complex (and hence accurate) models of abandonment than those simply based on time in system. To better inform our understanding of abandonment and guide our modeling of this behavior, we study three operational drivers of abandonment, namely, waiting time, queue-length, and service rate. Using operational data from a hospital emergency department, we show that all three factors affect a patient’s propensity for leaving the waiting area without being seen by a physician (LWBS). Further, these factors ...

REVISION: The Impact of Supplier Inventory Service Level on Retailer Demand
Date Posted: Jan  14, 2016
To set inventory service levels, suppliers must understand how changes in inventory service level affect demand. We build on prior research, which uses analytical models and laboratory experiments to study the impact of a supplier's service level on demand from retailers, by testing this relationship in the field. We analyze a field experiment at the supplier Hugo Boss to deter- mine how the supplier's inventory service level affects demand from its retailer customers. We find increases in historical fill rate to be associated with statistically significant and managerially substantial increases in current retailer orders (i.e., demand, not just sales). Specifically, a one percentage point increase in fill rate, measured over the prior year, is associated with a statistically significant 11% increase in current retailer demand, controlling for other factors that might affect retailer demand. We explore the drivers of this demand increase, including changes in retailer assortment and ...

New: Understanding the Behavioral Drivers of Execution Failures in Retail Supply Chains: An Experimental Study Using Virtual Reality
Date Posted: Oct  20, 2015
We conduct a real-effort experiment in an immersive virtual environment in order to quantify the role of product similarity in execution failures in a retail setting. In our experiments, subjects must identify and sort two types of products based on their observable characteristics. When the two products are very similar, performance is substantially lower (with both more sorting errors and more products left unsorted) than when the products are more dissimilar. Introducing a clear visual cue to distinguish the products improves execution when the products are dissimilar (by lowering sorting mistakes) and, even more so, when they are similar (both by reducing sorting mistakes and the number of products unsorted). In the latter case the average increase in overall performance is over 22 percentage points. Our results suggest that there may be important gains from taking ease of execution into account in the design of products, product packaging, and labeling.

REVISION: Point-of-Care Testing: Improving Emergency Department Performance through Process Redesign
Date Posted: Dec  08, 2012
Hospital emergency departments (EDs) typically rely on central laboratories to analyze patient samples for the purposes of diagnosing and treating patients. Point-of-care testing (POCT) is a process redesign that shifts the analysis of samples from the central lab to the ED. Using a queueing model, we generate hypotheses about how POCT impacts operational performance and then test those hypotheses empirically using data collected from a large, urban, tertiary, academic hospital. Specifically, ...

New: Supply Chain Optimization at Hugo Boss (B) - The M-Ratio
Date Posted: Jun  12, 2009
We evaluate the impact of a supply chain pilot implemented at Hugo Boss. This pilot entailed altering the way in which Hugo Boss orders from its suppliers. We explore the challenge of assessing the impact of supply chain change, the link between operational performance and firm performance, and the relationship between sales, inventory, and product availability.

New: Supply Chain Optimization at Hugo Boss (A)
Date Posted: Jun  12, 2009
Inventory, Order management cycle, Order processing, Order quantity, Lines of business, Product management, Consumer goods, Department stores, Retail stores, Retailers, Retailing, Supply chain management, Supply chains.