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.

REVISION: Fulfillment Errors and Chargeback Penalties in Retail Supply Chains
Date Posted: Aug  03, 2016
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 ...

REVISION: In Search of Intra-Echelon Bullwhips
Date Posted: Jul  21, 2016
Researchers exploring the bullwhip effect and its impact on supply chain performance utilize the conventional bullwhip measure, i.e., the ratio of variance in the stream of orders placed relative to the variance in orders received. We decompose this conventional bullwhip measure into three intra-echelon (component) bullwhips, namely, the shipment, manufacturing, and order bullwhips. We define the shipment bullwhip as the variance in shipments relative to the variance in orders received, the manufacturing bullwhip as the variance in manufacturing output relative to the variance in shipments, and the order bullwhip as the variance in orders placed relative to the variance in manufacturing output. We demonstrate that the conventional bullwhip is the product of each of these intra-echelon bullwhips. Moreover, using monthly, industry-level U.S. Census Bureau data, we characterize the magnitude of each of these intraechelon bullwhips and explore industry hetereogentiy in these measures. We ...

REVISION: Consistency and Recovery in Retail Supply Chains
Date Posted: Jun  29, 2016
Practitioners and researchers describe inventory service level using uni-dimensional metrics, e.g., in-stock and fill rate. However, prior research identifies dynamic aspects of supplier performance: 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). We develop a method for measuring consistency and recovery, and we test the method in the retail supply chain context using more than 40,000 order and fulfillment records provided by suppliers to retailers in two distinct settings. We model a retailer purchasing from competing suppliers with different levels of consistency and recovery. This model incorporates the retailer's uncertainty about demand and the retailer's uncertainty about its suppliers' service levels, which the retailer assesses using each supplier's prior performance. We characterize how the retailer's orders change with a supplier's performance through numerical ...

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: Execution Quality: An Analysis of Fulfillment Errors at a Retail Distribution Center
Date Posted: Jul  03, 2015
Purchase orders specify many aspects of the fulfillment process, including item quantity, delivery time, carton labeling, bar coding, electronic data interchange, retail ticketing, and others. These fulfillment terms are instrumental for highly optimized supply chains employing automation and techniques such as pack-by-store. When fulfilling a purchase order, a supplier may commit a fulfillment error, i.e., the supplier may fail to adhere to the terms specified by the relevant contract. We present a study of the fulfillment errors that occur in practice using data collected from a major retailer's distribution center. While fulfillment errors involving incorrect product quantities and delivery times have received the most attention in the literature, we find that the majority of fulfillment errors in the context we study involve documentation, bar coding, and retail ticketing. We refer to these as correctable fulfillment errors, since they are amended at the retailer's distribution ...

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.