Nonprofit Operations Management
My first study, and job market paper, examines the product portfolio management of a nonprofit for refugees (strategic planning). I investigate the optimal mix of cash and in-kind assistance using a game theory model completely informed by field research.
My second study examines financial resource management of nonprofits (tactical planning). I use dynamic programming to analyze the immediate reward of program spending and future reward of fundraising and administration spending of nonprofits.
My third study examines fleet composition management of a humanitarian organization (operational planning). I use monthly transportation and personnel expenses of twenty-four countries for thirteen years to build an empirical model that informs the nonprofit’s transportation decisions.
Kotsi, T., Wu, O., and Pedraza-Martinez, A.J. (2019). Donations for the Refugee Crisis: In-kind Versus Cash Assistance.
In 2019, armed conflicts cause the displacement of one person every two seconds. Motivated by our fieldwork in refugee camps in north-western Greece, we study the effect of the two main humanitarian assistance types provided to refugees: in-kind and cash assistance. In-kind assistance occurs when the humanitarian organization (HO) purchases goods and provides them to refugees directly. Cash assistance enables refugees to purchase the goods they want. Their purchases benefit local businesses---retailers---in the host community to the detriment of the purchasing power of local residents. We analyze the tradeoffs between in-kind and cash assistance from the perspective of a HO, which aims to maximize social welfare of refugees and host communities---retailers and residents. The combined purchasing power of refugees and residents may lead to increased selling prices and thus decreased quantities purchased by refugees. We propose a price regulation, implementable by a partnership between the HO and the local government, to curb the retailer's market power. We show that regulating the good's price benefits refugees and residents while ensuring retailer's profitability. Moreover, the HO's in-kind assistance to refugees should be balanced across multiple goods to discourage the retailer from increasing goods' prices asymmetrically.
Kotsi, T., Aydin, G., and Pedraza-Martinez, A.J. (2019). Allocation of Nonprofit Funds Among Program, Fundraising, and Administration.
Most US nonprofits disclose three types of expenses: program spending to meet their beneficiaries’ needs; fundraising spending to increase their future budget; administration spending to make their future budget more impactful. Charity watchdogs expect nonprofits to prioritize program over fundraising and administration. We study if nonprofits should ever prioritize fundraising and administration instead. Using a two-period model, we capture the tradeoff between the immediate reward from program and future rewards from fundraising and administration. We show that the optimal budget allocation depends critically on the nonprofit's budget and return on program (the net value of program to beneficiaries). For moderate return on program, the budget’s effect is intricate. While low budgets favor the prioritization of program, higher budgets might favor the prioritization of fundraising and administration for the nonprofit to be forward-looking. We then calibrate our model in a case study of two nonprofits with divergent models: in-kind aid versus cash aid. To assess the soundness of a nonprofit's budget allocation, one should know its return on program – a challenging metric to estimate. We derive the imputed return on program instead (the return on program at which the nonprofit's actual allocation matches our model’s optimal allocation). The imputed return on program, which uses public data, reasonably distinguishes between the nonprofits’ implicit assumptions, confirming that the in-kind nonprofit operates under the assumption that its services have added value for beneficiaries. This points to the imputed return on program as a promising tool to capture meaningful differences among nonprofits' budget allocations.
Reject and Resubmit to Manufacturing & Service.
Kotsi, T., Besiou, M., and Pedraza-Martinez, A.J. (2019). Armed Conflicts and Natural Disasters Effect on Humanitarian Fleet Management.
This study examines empirically the fleet composition of a large international humanitarian organization (HO) that responds to natural disasters and armed conflicts. We focus on understanding how the HO configures its fleet and specifically decides on renting or subcontracting transportation to deliver services to its beneficiaries. Transportation expenses are one of the largest expenses for the organization. We use thirteen-year panel data on transportation and personnel (local and expatriate) expenses of twenty-four country offices of this organization to build a fixed-effect model. We combine our proprietary data with publicly available data on natural disasters and armed conflicts.
Introduction to Operations Management
Teaching Philosophy: To develop students’ critical thinking and analytical skills, I use active learning and collaborative activities. Furthermore, I bring examples from operations in daily life to increase engagement and spark my students’ enthusiasm.
Semesters: Spring & Fall 2017, Fall 2019
Evaluation Score: 6.4 / 7
Quotes from students:
"I enjoyed the overall scope of knowledge about Operations Management that was presented. I feel like I can grasp a lot of information about operation management now that I have a very broad scope of knowledge about the subject."
"Professor Kotsi was very invested in her students. Out of all of my professors the three years I have attended Indiana University, she was the most available and the most eager to help students understand the hard material. She was great!!!"
"Without your teaching, I wouldn't have been able to hold a conversation about the critical path and its role in project management that was essential during my interview for a Functional Consultant at Oracle"
Awards, Honors and Certificate
Finalist for the Panschar Associate Instructor Award, Operations and Decision Technologies, Kelley School of Business, Indiana University, 2018
Doctoral Student Research Productivity Award, Kelley School of Business, Indiana University Bloomington, 2017
Dean’s Fellowship, Kelley School of Business, Indiana University Bloomington, 2014
Engineering and Physical Sciences Research Council (EPSRC) Bursary by the School of Mathematics, University of Edinburgh, 2011
Nonprofits have two decoupled sets of stakeholders: donors who fund nonprofit operations and beneficiaries to which nonprofits provide goods and services. Also, nonprofits operate in complex environments that are unappealing to for-profit firms. These issues create unique operational challenges for nonprofits. To understand these challenges, I have taken time to visit refugee camps in Greece, interview managers at foodbanks in USA, and analyze data from a large humanitarian organization that operates worldwide. To get solid insights, I use rigorous analytical methods such as game theory, dynamic programming, and econometrics.