a new decision rule for lateral transshipments in inventory systems this paper deals with a single echelon inventory system consisting of a number of parallel local warehouses facing compound poisson demand there are standard holding and backorder costs as well as ordering costs at all warehouses normally the warehouses replenish from an outside supplier however lateral transshipments between the warehouses are also possible such transshipments take no time but incur additional costs when a demand occurs at a warehouse the question is whether the whole demand or part of it should be covered by a lateral transshipment from another warehouse given a set of alternative decisions our decision rule minimizes the expected costs under the assumption that no further transshipments will take place this rule is then used repeatedly as a heuristic a simulation study illustrates how the suggested technique performs under different conditions

social security pensions and retirement behavior within the family this paper estimates a structural model of family retirement using us data from the health and retirement study hrs it provides further insight into household retirement decision making and the reasons for interdependence in the retirement decisions of each spouse improvements in hrs data and matched employer provided pension histories allow more precise identification of key parameters governing interdependent behaviour within the household in an earlier study we found that interdependence was due to preferences rather than coordination of retirement incentives in the budget and in particular that it is not a correlation in preferences but the appearance of the spouse s retirement status in the husband s and wife s utility function that is largely responsible for coordination of retirement between spouses we now find that a measure of how much each spouse values being able to spend time in retirement with the other accounts for a good portion of that apparent interdependence for the wife the husband s retirement status influences her retirement decision only if she values spending time in retirement with her husband for husbands the effect of having the wife already retired on his retirement decision is roughly doubled if he enjoys spending time in retirement with his wife but there is some effect even if he does not this is consistent with our earlier findings that the husband is more influenced by having a retired spouse than the wife is the increase in the extent of the dependence of the wife s labour supply on the husband s retirement from our past work probably is traceable to better measurement of the opportunity set facing the husband in hrs data once estimated we use the model to investigate the labour supply effects of alternative social security policies examining the effect of dividing credit for earnings evenly between spouses or of basing social security benefits on the amounts accumulated in private accounts both policies change the relative importance of spouse and survivor social security benefits within the household and both raise the relative reward to work later in the life cycle the incentives created are modest and retirement responds accordingly nevertheless at some ages such as 65 there may be as much as a 6 increase in the old age work force under privatized accounts copyright 2004 john wiley sons ltd

did the elimination of mandatory retirement affect faculty retirement a special exemption from the 1986 age discrimination act allowed colleges and universities to enforce mandatory retirement of faculty at age 70 until 1994 we construct a survey that permits us to compare faculty turnover rates before and after the law changed at a large sample of institutions with defined contribution pension plans after the elimination of compulsory retirement the retirement rates of 70 and 71 year olds fell by two thirds and were comparable to rates of 69 year olds these findings indicate that u s colleges and universities will experience a rise in the number of older faculty over the coming years jel j26 i21

enhanced lateral transshipments in a multi location inventory system in managing an inventory network two approaches to the pooling of stock have been proposed reactive transshipments respond to shortages at a location by moving inventory from elsewhere within the network while proactive stock redistribution seeks to minimize the chance of future stockouts this paper is the first to propose an enhanced reactive approach in which individual transshipments are viewed as an opportunity for proactive stock redistribution we adopt a quasi myopic approach to the development of a strongly performing enhanced reactive transshipment policy in comparison to a purely reactive approach to transshipment service levels are improved while a reduction in safety stock levels is achieved the aggregate costs incurred in managing the system are significantly reduced especially so for large networks moreover an optimal policy is determined for small networks and it is shown that the enhanced reactive policy substantially closes the gap to optimality

a semi markov decision problem for proactive and reactive transshipments between multiple warehouses abstract lateral transshipments are an effective strategy to pool inventories we present a semi markov decision problem formulation for proactive and reactive transshipments in a multi location continuous review distribution inventory system with poisson demand and one for one replenishment policy for a two location model we state the monotonicity of an optimal policy in a numerical study we compare the benefits of proactive and different reactive transshipment rules the benefits of proactive transshipments are the largest for networks with intermediate opportunities of demand pooling and the difference between alternative reactive transshipment rules is negligible

the effect of market segmentation with demand leakage between market segments on a firm s price and inventory decisions abstract in this paper we address the simultaneous determination of price and inventory replenishment in a newsvendor setting when the firm faces demand from two or more market segments in which the firm can set different prices we allow for demand leakage from higher priced segments to lower priced segments and assume that unsatisfied demand can be backlogged we examine the case where the demands occur concurrently without priority and are met from a single inventory we consider customer s buy down behavior explicitly by modeling demand leakage as a function of segment price differentiation and characterize the structure of optimal inventory and pricing policies

the impact of customer returns on pricing and order decisions abstract in this paper we address the simultaneous determination of price and inventory replenishment when customers return product to the firm we examine cases when the quantity of returned product is a function of both the quantity sold and the price in single and multi period problems with and without uncertainty in demand we derive results for optimal prices and order quantities and discuss how the firm should change price and inventory quantities in order to mitigate the negative effects of returns from customers

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

optimal fences and joint price and inventory decisions in distinct markets with demand leakage abstract this paper evaluates the simultaneous determination of price and inventory replenishment when a firm faces demand from distinct market segments a firm utilizes fences such as advance or nonrefundable payment to maintain separation of its market segments however fences are imperfect and allow a degree of demand leakage from the higher priced to the lower priced market segment we investigate the optimal structure of joint price and inventory decisions with fencing and demonstrate that more segments is not necessarily better especially when demand uncertainty is high in the presence of lost sales we also show the impact of imperfect fences on the firm s profitability and evaluate how fencing costs affect the optimal fencing decision

bridge jobs and partial retirement the job stopping process of older workers often includes some combination of postcareer bridge employment partial retirement and reverse retirement fewer than two fifths of household heads retire directly from career jobs over half partially retire at some point in their working lives and a quarter reenter the labor force after initially retiring in addition postcareer employment is frequently located outside the industry and occupation of the career job and there are important differences in postcareer labor force experiences by gender permanent income and career job pension status

approximate dynamic programming for lateral transshipment problems in multi location inventory systems abstract companies commonly allocate their inventories across multiple locations based on their historical sales rates however random fluctuations in customer purchases such as those caused by weather conditions and other external factors might cause significant deviations from expected demand leading to excess stock in some locations and stockouts in others to fix this mismatch companies often turn to lateral transshipments e g the movement of stock between locations of the same echelon in this paper we examine multi location inventory systems under periodic review with multiple opportunities for proactive transshipments within one order cycle if stockouts occur demand is lost with no opportunity to backorder the objective of our model is to find an optimal policy that indicates the sources and the destinations of transshipments as well as the number of units to maximise the profit of the network we create a dynamic program that can in principal be solved to optimality using bellman s equation however the size of the state and decision spaces makes it impossible to find the optimal policy for real world sized problem instances thereby we use forward approximate dynamic programming to find a near optimal transshipment policy finally we conduct an extensive numerical study to gauge the performance of our transshipment policy for small size instances we compare our policy to the optimal one for larger scale instances we consider other practically oriented heuristics our numerical experiments show that our proposed algorithm performs very well compared to state of the art methods in the literature

dollar vs percentage markup pricing schemes under a dominant retailer abstract we investigate two very common pricing schemes for a stackelberg dominant retailer percentage markup and dollar markup we show that when a dominant retailer switches from dollar to percentage markup the channel s overall pie and the retailer s pie piece are both enlarged in contrast the manufacturer will be forced to levy a lower wholesale price thus receiving a smaller pie piece despite the larger pie the preceding statements hold regardless of whether the demand is deterministic or stochastic however the effects of switching to percentage markup on the retail price and sales volume will depend not only on whether the demand is stochastic but also on the assumed demand curve shape and on whether demand stochasticity is additive or multiplicative besides presenting a comprehensive set of answers on the comparative performance of dollar and percentagemarkups our results also highlight the often overlooked importance of choosing between i dollar and percentage markup and ii the formats of the assumed stochasticity and demand curves

gluttony and sloth calories labour market activity and the rise of obesity the rise in obesity has largely been attributed to an increase in calorie consumption we show that official government household survey data indicate that levels of calorie consumption have declined in england between 1980 and 2013 while there has been an increase in calories from food eaten out at restaurants fast food soft drinks and confectionery overall there has been a decrease in total calories purchased households have shifted towards more expensive calories both by substituting away from home production towards market production and substituting towards higher quality foods we show that the decline in calories can be partially but not entirely rationalized with weight gain by a decline in the strenuousness of work and daily life jel d12 i12 i18

retirement in the uk in common with other oecd countries the uk experienced more than two decades of declining labour market activity among older men from the 1970s to the early 1990s a trend that has only recently shown signs of being reversed retirement decisions are heavily shaped by institutional context and in the uk this has led to there being two distinct groups with very different retirement experiences at the top of the wealth distribution early retirement has typically been influenced by private occupational pensions at the bottom of the wealth distribution individuals are even more likely to be not working in their 50s but do not typically define themselves as retired and draw on income support or more usually disability benefits policy makers keen to increase effective retirement ages will need to consider the very different circumstances of these two groups

mark up pricing and bilateral monopoly abstract if managers use cost based percentage margins when pricing their goods these margins should be determined as equilibrium choices this paper studies the case of bilateral monopoly and compares the nash equilibrium in percentage and in absolute mark ups we show that percentage mark ups lead to lower equilibrium prices and higher downstream profits

retirement and the evolution of pension structure defined benefit pension plans have become considerably less common since the early 1980s while defined contribution plans have spread previous research showed that defined benefit plans with sharp incentives encouraging retirement after a certain point contributed to the striking decline in american retirement ages in this paper we find that the absence of agerelated incentives in defined contribution plans leads workers to retire almost two years later on average compared to workers with defined benefit plans thus the evolution of pension structure can help explain recent increases in the typical retirement age after decades of decline

who benefits from transshipment exogenous vs endogenous wholesale prices this paper studies how transshipments affect manufacturers and retailers considering both exogenous and endogenous wholesale prices for a distribution system where a single manufacturer sells to multiple identical cost retailers we consider both the manufacturer being a price taker and the manufacturer being a price setter in a single period setup under multivariate normal demand distribution in the case of the manufacturer being a price taker we provide several analytical results regarding the effects of key parameters on order quantities and profits in the case of the manufacturer being a price setter we characterize the stackelberg game that arises and provide several insights into how the game dynamics are affected by transshipments specifically we find that risk pooling makes retailers order quantities less sensitive to the wholesale price set by the manufacturer hence in general the manufacturer benefits from retailers transshipments by charging a higher wholesale price while retailers are often worse off the paper captures the effect of demand correlation and the effect of the number of retailers throughout and it illustrates the findings by a numerical example we also provide an interactive web page for numerical experiments

dynamic balancing of inventory in supply chains abstract we consider the dynamic version of the classic problem of allocation of inventories to a set of retailers to rectify the imbalance of inventories amongst them while most research is focussed on analyzing different allocation strategies with a predetermined time of shipment static policy we investigate the benefit of using real time demand inventory information to schedule rebalancing shipments in a retail network we model the dynamic rebalancing problem that has two decisions the timing of the balancing shipments and determination of the new stocking levels at the retailers as a dynamic program dp we obtain structural properties for the optimal allocation rebalancing and timing strategies we also present conditions under which a greedy heuristic to decide how much to ship from one retailer to another is optimal the dp for determining the optimal timing and quantity of shipments has a very large state space we present an algorithm to solve this dp efficiently we also provide a heuristic solution procedure to the dynamic problem that performs very close to optimal numerical results show that dynamic allocation policies can lead to substantial benefits over the static policy especially in systems in which the starting inventories at the retailers are balanced or when high service levels are required

coordination mechanisms of supply chain systems supply chain management scm has become an important management paradigm as supply chain members are often separate and independent economic entities a key issue in scm is to develop mechanisms that can align their objectives and coordinate their activities so as to optimize system performance in this paper we provide a review of coordination mechanisms of supply chain systems in a framework that is based on supply chain decision structure and nature of demand this framework highlights the behavioral aspects and information need in the coordination of a supply chain the identification of these issues points out several directions of future research in this area

manufacturer s return policy in a two stage supply chain with two risk averse retailers and random demand abstract this paper studies the manufacturer s return policy and the retailers decisions in a supply chain consisting of one manufacturer and two risk averse retailers under a single period setting with price sensitive random demand we characterize each retailer s risk embedded objective via conditional value at risk and construct manufacturer stackelberg games with and without horizontal price competition between the retailers we explore through numerical studies the effects of the retailers aversion to risk and other parameters on the manufacturer s return policy and profit and the retailers decisions we further investigate the effect of distribution asymmetry by comparing the results with normal and lognormal demand

combined demand and capacity sharing with best matching decisions in enterprise collaboration abstract demand and capacity sharing dcs among entities within a supply network are common practice and have become attractive strategies for competing and non competing supply enterprises ses examples include airlines test and assembly factories and outsourced maintenance and logistics providers the purpose maximize profit and resource utilization enable timely delivery to customers in spite of uncertain market demands and unexpected capacity shortages and maximize the overall stability dcs protocols are defined for the ses with capacity shortage known as demand sharing ses to utilize excess capacities of other ses known as capacity sharing ses thus fulfilling their current customers demand more effectively while eliminating excess inventory of capacity sharing ses these dcs roles vary over time high frequency of dcs decisions could impose additional costs to the collaborative network of ses cnse in terms of transactions negotiations and lateral transshipment of stocks between ses attention must be paid to the inevitable costs of collaboration for dcs best matching bm protocol is proposed to minimize the dcs costs through dynamic matching of ses and customers with respect to the customers demand and ses available capacity to share bm protocol is also applied for finding the best matches between dcs proposals during collaboration negotiations among ses a novel mixed integer programming mip formulation is developed for modeling and analyzing the combined dcs bm decisions the dcs bm model is then validated using the queuing theory it is shown mathematically and through numerical experiments that the dcs bm model 1 outperforms the previous non collaborative models in terms of resource utilization and stability and 2 provides a dominating strategy compared with both collaborative and non collaborative models for optimizing the total cnse profit and service level

pricing and rebate policies for the newsvendor problem in the presence of a stochastic redemption rate abstract this paper develops the pricing rebate ordering policies of a profit maximizing vendor faced with a stochastic rebate redemption rate and a price rebate dependent random demand all within the single period framework of the newsvendor problem the profitability of these policies directly relates to the redemption rate which in turn depends upon the rebate value by itself and relative to the sales price a random element accounts for the uncertainty in the estimation of such rate the decision variables are the sales price the rebate value and the order size a numerical example and various sensitivity analyses illustrate the main managerial insights of the model one of the key results is that the introduction of uncertainty in the redemption rate contrary to what happens when moving from a deterministic to a stochastic demand leads the rebate policy to dominate its price discount counterpart

age discrimination laws and labor market efficiency in lazear s model of long term incentive contracts age discrimina tion laws barring age based involuntary terminations preclude such contracts reducing efficiency alternatively such laws may serve as precommitment devices for these contracts without pre venting firms from offering strong financial incentives to induce retirement at specific ages in this case age discrimination laws may encourage lazear contracts hence increasing efficiency we assess evidence on these alternative interpretations using variation in state and federal age discrimination laws the evidence indicates that age discrimination laws steepen age earnings profiles for co horts entering the labor market suggesting that these laws encour age the use of lazear contracts

research note vertical information sharing in a volatile market when demand is uncertain manufacturers and retailers often have private information on future demand and such information asymmetry impacts strategic interaction in distribution channels in this paper we investigate a channel consisting of a manufacturer and a downstream retailer facing a product market characterized by short product life uncertain demand and price rigidity assuming the firms have asymmetric information about the demand volatility we examine the potential benefits of sharing information and contracts that facilitate such cooperation we conclude that under a wholesale price regime information sharing might not improve channel profits when the retailer underestimates the demand volatility but the manufacturer does not although information sharing is always beneficial under a two part tariff regime it is in general not sufficient to achieve sharing and additional contractual arrangements are necessary the contract types we consider to facilitate sharing are profit sharing and buyback contracts

pensions overview of the issues many countries face increasing fiscal problems financing pensions in the face of population aging there is controversy about the underlying economic theory about the extent of the problem and about the best mix of policies to protect old age security this paper establishes the areas of debate gives thumbnail descriptions of pension arrangements in different countries discusses the main analytical and empirical issues relevant to thinking about pension design and assesses a range of policy directions the main conclusions are that what matters most is effective government and economic growth that the debate between pay as you go and funding is secondary that good pension schemes can take many forms and that there is a problem in financing pensions but not a crisis copyright 2006 oxford university press

industrial pricing theory and managerial practice we organize the existing theoretical pricing research into a new two level framework for industrial goods pricing the first level consists of four pricing situations new product competitive product line and cost based the second level consists of the pricing strategies appropriate for a given situation for example within the new product pricing situation there are three alternative pricing strategies skim penetration and experience curve pricing there are a total of ten pricing strategies included in the framework we then identified a set of cost product market and information conditions which determine what pricing situation s a firm is facing as well as which strategies are appropriate within a given situation some of these determinant conditions are common to many pricing strategies e g highly elastic demand while others are unique to a given strategy within a particular pricing situation for example within the product line situation the profitability of supplementary sales is a unique determinant of the complementary product pricing strategy razor and blade pricing using this framework as a basis for an empirical study we examined how well current industrial pricing practice matches the prescriptions from the existing research our sample consisted of 270 respondents 27 response rate of these more than 50 indicated that they used more than one pricing strategy in formulating their most recent pricing decision for a high value industrial product sold in the united states as in previous research cost plus pricing was the most often cited pricing strategy 56 of the respondents since the respondents were able to indicate their use of more than one pricing strategy the data are of the pick k from n variety in order to model the managers pricing strategy choices we constructed a stacked binary logit with a separate observation for each strategy within a given pricing situation the signs of the determinant variables were estimated as interaction terms the new product pricing strategies skim penetration experience curve were used for new models in the market skim pricing was used in markets with high levels of product differentiation by firms at a cost disadvantage due to scale penetration pricing was used by firms with a cost advantage due to scale in markets with high level of overall elasticity but low brand elasticity experience curve pricing was used for minor innovations by firms with low capacity utilization in markets with a high level of differentiation the competitive pricing strategies leader parity and low price supplier were used in mature markets parity pricing was used by firms in a poor competitive situation i e high costs low market share low product differentiation these firms were also unable to take advantage of high levels of elasticity since their capacity utilization was high in contrast the low price supplier strategy was used by firmswith low costs due to scale advantages since they have low utilization these firms can take advantage of elastic brand demand none of the determinants were significantly related to the choice of leader pricing product line pricing strategies bundling complementary product and customer value pricing were more likely to be used by firms which sell substitute or complementary products bundle pricing was used for per sale contract pricing in markets with high levels of brand elasticity complementary product pricing razor and blade was used by firms that enjoyed high profitability on its supplementary sales using customer value pricing a firm offers a stripped down version of its current products to appeal to more price sensitive segments or to leverage new distribution channels this strategy was used to target a narrow segment in high growth markets where price changes are difficult to detect cost based pricing was more likely to be used in marketswhere demand is very difficult to estimate in such a situation cost based pricing makes a great deal of sense in general the results show that the managers pricing strategy choices are consistent with normative pricing research however questions about how managers combine their strategies to arrive at a final price as well as the organizational influences on pricing strategies remain important areas for future research

note channel of distribution profits when channel members form conjectures it is well known that lower channel profits are achieved in the bilateral manufacturer reseller monopoly if manufacturer and reseller independently optimize their respective profits they take each other s decisions as given i e adopt decision rules that ignore their influence on the other channel member higher profits are achieved if they coordinate their profit maximizing decisions consequently there is an economic justification for 1 vertical integration that by definition prevents conflicting profit objectives or 2 contracts that change channel members incentives to the compatible objectives of shares of total channel profits this paper investigates the possibility that coordination might take place without formal arrangements like vertical integration or contracts the reason for this contention is the casual observation that channel members are often acutely aware of the interdependencies between channel participants we might thus expect that they will form conjectures about other channel members reactions to their own actions we show that rational conjectures lead profit maximizing channel members to adopt modified decisions rules can such conjectural decision making create at least partially channel coordination or cooperation in other words can channel members deviate from the nash equilibrium and thus achieve greater profits the answer given in this paper is a conditional yes

on sequential commitment in the price dependent newsvendor model abstract we investigate the effect of sequential commitment in the decentralized newsvendor model with price dependent demand sequential commitment allows the self profit maximizing parties to commit to contract parameters e g wholesale price retail price buyback price and order quantity sequentially and alternately and we investigate its effect on the equilibrium profits of the channel and its members sequential commitment introduces more flexibility to contracting in the supply chain and our analysis can provide some insight to channel members who follow a bargaining process to determine the values of contract parameters we show that the introduction of sequential commitment to the price dependent pd newsvendor model with buybacks can significantly improve the manufacturer s and the channel expected profits but it can also decrease the retailer s expected profit finally we demonstrate that with sequential commitment under some conditions the choice of the first mover is endogenized and we identify the unique sequence of commitments by channel members that would arise in equilibrium

how a dominant retailer might design a purchase contract for a newsvendor type product with price sensitive demand abstract a dominant retailer will purchase a newsvendor type product from a manufacturer who incurs a unit manufacturing cost k the expected retail demand is a function of the unit retail price p how should the retailer design her purchase contract for this increasingly prevalent but inadequately studied scenario we propose plausible adaptations of several contract formats that have been widely studied in the dominant manufacturer context for both symmetric k and a symmetric k knowledge situations we present performance results of these contracts our results then reveal that the performance of these contract formats under our scenario differs considerably from what one would surmise from the well known results published for closely related scenarios for example the widely studied buyback and revenue sharing formats turn out to be largely ineffective when implemented by a dominant retailer in contrast the two part tariff format performs well relative to the theoretically optimal menu of contracts our results highlight the need to study purchase contract formats designed specifically for dominant retailer newsvendor product channels

the retirement consumption puzzle and involuntary early retirement evidence from the british household panel survey this article uses data from the british household panel survey bhps to shed further light on the fall in consumption at retirement the retirement consumption puzzle comparing food spending of men retiring involuntarily early through ill health or redundancy with spending of men who retire voluntarily it finds a significant fall in spending only for those who retire involuntarily this is consistent with the observed fall in spending being linked to a negative wealth shock for some retirees

a pricing model for clearing end of season retail inventory the problem of setting prices for clearing retail inventories of fashion goods is a difficult task that is further exacerbated by the fact that markdowns enacted near the end of the selling season have a smaller impact on demand in this article we present discrete time models for setting clearance prices in such an environment when demand is deterministic we compute optimal prices and show that decreasing reservation prices lead to declining optimal prices when demand is stochastic and arbitrarily correlated across planning periods we obtain bounds on the optimal expected revenue and on optimal prices we also develop a heuristic procedure for finding near optimal prices and test its accuracy through numerical experiments these experiments reveal new insights for practitioners for example the penalty for choosing clearance price once and keeping it unchanged for the remainder of the selling season is found to be small when either the mean reservation prices do not change appreciably over time or when they drop sharply after the first period

effects of a demand curve s shape on the optimal solutions of a multi echelon inventory pricing model abstract when a price demand relationship is needed in inventory pricing models very often a convenient typically linear function is arbitrarily chosen the common wisdom implication is that any downward sloping demand curve would lead to similar conclusions this paper applies different demand curve functions to a simple inventory pricing model and shows that while the common wisdom implication is valid for a single echelon system assuming different demand curve functions can lead to very different results in a multi echelon system in some situations a very small change in the demand curve appearance leads to very large changes in the model s optimal solutions other significant but counter intuitive effects of the demand curve form are also revealed this paper does not completely resolve the difficulties revealed by the counter intuitive effects reported here but establishing the existence of these effects represents a first step towards developing procedures to handle such effects these procedures will be necessary to ensure the reliability of many multi echelon models for products having price sensitive demands

retail price markup commitment in decentralized supply chains abstract we investigate the operational decisions and resulting profits for a supply chain facing price dependent demand under a policy where there is an ex ante commitment made on the retail price markup we obtain closed form solutions for this policy under the assumption of a multiplicative demand function and we analytically compare its performance with that of a traditional price only policy we compare these results to results obtained when demand follows a linear additive form these formulations are shown to be qualitatively different as the manufacturer s wholesale pricing decision is independent of the retail price markup commitment in the multiplicative case but not when demand is linear additive we demonstrate that the ex ante commitment can lead to pareto improving solutions under linear additive demand but not under the multiplicative demand function we also consider the effect of pricing power in the supply chain by varying who determines the retail price markup

inventory policies under various optimizing criteria and variable markup rates this paper extends the deterministic eoq model to reflect various optimizing criteria and alternative demand and price structures its primary purpose is to develop decision rules for the management of finished goods inventories especially in retailing where inventories are evaluated in the same way as any other investment namely on their ability to generate profits rather than on the traditional least cost basis to that effect the models developed here consider demand to be a function of price with price defined as a markup of unit cost the decision variables are the order quantity and the markup rate possible optimizing objectives include profits return on investment or residual income the three most widely used evaluators of short term investment performance optimal solutions for each case are obtained and the resulting inventory policies evaluated

note the role of returns policies in pricing and inventory decisions for catalogue goods manufacturers often use returns policies to encourage retailers to stock and price items more aggressively we focus on the effect that such policies have on both a retailer s and a manufacturer s profits when the retailer must commit prior to the selling season to both a stocking quantity and a price at which to sell an item such a commitment is often necessary for retailers who sell primarily through catalogues

optimal and approximate policies in multiperiod multilocation inventory models with transshipments this paper examines the effects on the optimal ordering policy and its cost of allowing for interactions among retail outlets specifically transshipments are allowed as recourse actions occurring after demands are realized but before they must be satisfied the resultant savings in holding and shortage costs are balanced against the costs of transshipment a base stock ordering policy is optimal for this model if the final period base stock order up to point is nonnegative then it will be the base stock order up to point for all periods unfortunately it can be found analytically only for two special cases where either the cost parameters are equal at every outlet or there are only two outlets these two special cases are used to validate a heuristic solution technique employing monte carlo integration which is then compared to an easily calculated base policy in order to gauge the contribution of this model the additional savings from using this heuristic policy are significant particularly for problems with many retail outlets and low transshipment costs

an index heuristic for transshipment decisions in multi location inventory systems based on a pairwise decomposition in multi location inventory systems transshipments are often used to improve customer service and reduce cost determining optimal transshipment policies for such systems involves a complex optimisation problem that is only tractable for systems with few locations consequently simple heuristic transshipment policies are often applied in practice this paper develops an approximate solution method which applies decomposition to reduce a markov decision process model of a multi location inventory system into a number of models involving only two locations the value functions from the subproblems are used to estimate the fair charge for the inventory provided in a transshipment this estimate of the fair charge is used as the decision criterion in a heuristic transshipment policy for the multi location system a numerical study shows that the proposed heuristic can deliver considerable cost savings compared to the simple heuristics often used in practice

demand disruption and coordination of the supply chain with a dominant retailer this paper develops two coordination models of a supply chain consisting of one manufacturer one dominant retailer and multiple fringe retailers to investigate how to coordinate the supply chain after demand disruption we consider two coordination schedules linear quantity discount schedule and groves wholesale price schedule we find that under the linear quantity discount schedule the manufacturer only needs to adjust the maximum variable wholesale price after demand disruption for each case of the disrupted amount of demand the higher the market share of the dominant retailer the lower its average wholesale price and the subsidy will be under the linear quantity discount schedule while the higher its fraction of the supply chain s profit will be under groves wholesale price schedule when the increased amount of demand is very large and production cost is sufficiently low linear quantity discount schedule is better for the manufacturer however when the production cost is sufficiently large groves wholesale price schedule is always better we also find that the disrupted amount of demand largely affects the allocation of the supply chain s profit

simple economics of the price setting newsvendor problem the lerner relationship linking the profit maximizing price to marginal cost and the elasticity of demand generalizes to the price setting newsvendor and the result resolves the puzzle over the different effects of additive and multiplicative uncertainty on the solution multiplicative uncertainty increases the optimal price because it increases the marginal cost of a unit sold and does not affect the markup factor additive uncertainty has no effect on the marginal cost of a unit sold and lowers the markup factor because it increases the elasticity of the average quantity sold with respect to price this paper was accepted by martin lariviere operations management