Faculty & Research

Nicole DeHoratius

Adjunct Professor of Operations Management

Address :
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.


2015 - 2016 Course Schedule

Number Name Quarter
40101 Supply Chain Strategy and Practice 2016 (Winter)
40801 Operations Management 2015 (Fall)
40810 Strategic Service Design and Delivery 2016 (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.

Execution Quality: An Analysis of Fulfillment Errors in a Retail Distribution Center, with Nathan Craig, Yan Jiang, and Diego Klabjan (forthcoming), Journal of Operations Management.

With Zeynep 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).

With Lisa Rohrer, "Seyfarth Lean: Transforming Legal Service Delivery at Seyfarth Shaw", Harvard Law School (2015).

"Global Sourcing at Walmart", University of Chicago Booth School of Business (2014). With Mark Barratt, "Retail Analytics and Behavioral Operations: A Recipe for Superior Performance," Cutter Consortium Data Insight & Social Business Intelligence Executive Update (2012).

With Elliot Rabinovich, "Field Research in Operations and Supply Chain Management," Journal of Operations Management (2011).

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

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

With Ananth Raman and Zahra Kanji, "Supply Chain Optimization at Hugo Boss (A) and (B)", Harvard Business School Press (2009).

With Ananth Raman, "Inventory Record Inaccuracy: An Empirical Analysis," Management Science (2008).

With Adam Mersereau and Linus Schrage, "Retail Inventory Management When Records Are Inaccurate," M&SOM (2008).

With Marshall Fisher and Serguei Netessine, "McDonald's Corporation: Launching McCafe," University of Pennsylvania, The Wharton School (2008).

For a listing of research publications please visit ’s university library listing page.

New: Consistency and Recovery in Retail Supply Chains
Date Posted: Mar  31, 2016
We extend prior research on retailers ordering from unreliable suppliers to incorporate dynamic aspects of supplier performance identified in the literature: 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 using more than 40,000 order and fulfillment records collected from two suppliers to retailers (387 SKUs over 268 weeks). We propose a model of a retailer purchasing from two competing suppliers with different levels of consistency and recovery. The model incorporates both the retailer's uncertainty about its demand and the retailer's uncertainty about its suppliers' reliabilities, which the retailer assesses using each supplier's prior performance. We use the empirical data to conduct numerical experiments with the model that characterize how the retailer's orders change with a supplier's ...

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.

New: In Search of Intra-Firm Bullwhips
Date Posted: Sep  10, 2015
Researchers exploring the bullwhip effect and its impact on supply chain performance utilize the conventional bullwhip measure, i.e., the ratio of variances in the stream of orders placed relative to orders received. Building upon this existing research, we decompose the conventional bullwhip measure into three intra-firm bullwhips, namely, the shipment, manufacturing, and order bullwhips. We define the shipment bullwhip as the variance in shipments relative to orders received, the manufacturing bullwhip as the variance in manufacturing output relative to shipments, and the order bullwhip as the variance in orders placed relative to manufacturing. We demonstrate that the conventional bullwhip is the product of each of these component bullwhips. Moreover, using monthly, industry-level U.S. Census Bureau data, we characterize the magnitude of each of these component bullwhips across industries, examine correlations between them, and identify factors that may be associated with industry ...

New: Inventory Management with Fulfillment Errors and Rework
Date Posted: Jul  30, 2015
Retailers replenish inventory by placing purchase orders (POs) with suppliers. POs stipulate terms for fulfillment beyond order quantity and delivery time, such as specifications for electronic data interchange, carton labeling, and retail tickets. These fulfillment terms are instrumental for optimized supply chains employing automation and techniques such as pack-by-store. When fulfilling an order, a supplier may commit a fulfillment error, i.e., the supplier may fail to adhere to the terms specified by the PO. Prior research has shown that the retailer can correct the majority of fulfillment errors through rework. In this article, we study how inventory policy and cost change in the presence of such correctable fulfillment errors. Further, we examine how retailers respond to fulfillment errors in practice by characterizing commonly used penalties, or chargebacks. Our research provides guidance to managers seeking to mitigate fulfillment errors and demonstrates that chargebacks ...

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, we

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.