cores of inventory centralization games abstract consider a set of n stores with single item and single period demands assume an option of centralized ordering and inventory with holding and penalty costs only in this case a cooperative inventory centralization game defines allocations of the cost we examine the conditions under which such an inventory centralization game has a nonempty core we prove the existence of nonempty core for demands with symmetric distributions and the existence of nonempty core for joint multivariate normal demand distribution we establish the equivalency of four different nonempty core conditions for the newsboy problem and demonstrate their efficacy for discrete independent and identically distributed iid demands journal of economic literature classification numbers c44 c62 c71

optimal pricing shipment and payment policy for an integrated supplier buyer inventory model with two part trade credit abstract in this article we develop an integrated supplier buyer inventory model with the assumption that the market demand is sensitive to the retail price and the supplier adopts a trade credit policy the trade credit policy discussed in this paper is a two part strategy cash discount and delayed payment that is if the buyer pays within m1 the buyer receives a cash discount otherwise the full purchasing price must be paid before m2 where m 2 m 1 0 the objective of this research is to determine the optimal pricing ordering shipping and payment policy to maximize the joint expected total profit per unit time an iterative algorithm is established to obtain the optimal strategy furthermore numerical examples and sensitivity analysis are presented to illustrate the results of the proposed model and to draw managerial insights

marketable pollution permits in oligopolistic markets with transaction costs in this paper we present a variational inequality framework for the modeling qualitative analysis and computation of equilibrium patterns in multiproduct multipollutant oligopolistic markets with marketable pollution permits in the presence of transaction costs the model deals explicitly with spatial differentiation and also guarantees that the imposed environmental quality standards are met through the initial allocation of licenses an algorithm is proposed with convergence results to compute the profit maximized quantities of the oligopolistic firms products and the quantities of emissions along with the equilibrium allocation of licenses and their prices numerical examples are included to illustrate this approach

collaborative replenishment in the presence of intermediaries in complex supply chains downstream buyers would often replenish individually from intermediaries instead of directly dealing with original manufacturers although collaborative replenishment from intermediaries might generate benefits significant cost reductions could be achieved when direct replenishments from manufacturers are considered this paper constructs a general model to study collaborative replenishment in multi product chains with alternative sources of supply i e manufacturers and intermediaries a collaborative organization determines the optimal choices of replenishment sources on behalf of its members to minimize collective costs we introduce a class of cooperative games associated with these situations and give sufficient conditions for their concavity we investigate the choice of allocation rule and its effect on supply chain efficiency when buyers strategically participate in the collaborative organization we prove that the shapley value coordinates the supply chain i e it makes complete participation the best strategy for buyers even under asymmetric information this setting is compared with an alternative structure where buyers can only collaborate in source specific replenishment organizations that purchase all requested products either from intermediaries or manufacturers although there are always participation strategies that result in minimum collective cost it is impossible to find allocation rules for source specific replenishment organizations that always motivate the buyers to choose such strategies

foundation ownership reputation and labour a number of firms in northern europe and especially in denmark are owned by private foundations similarly to what would have been the case if the ford foundation had owned a majority of the shares in ford motor company foundation owned companies appear to perform surprisingly well in terms of profitability and growth despite lacking governance mechanisms such as profit incentives or takeover threats given their non profit ownership they might be expected to behave more responsibly towards stakeholders such as employees or customers hansmann 1980 but so far there has been little empirical evidence to support this hypothesis this paper presents new research on the reputation and responsibility of foundation owned companies in a panel of large danish companies 2001 11 we find that foundation owned firms have better reputations and are regarded as more socially responsible in corporate image ratings secondary evidence on labour market behaviour is consistent with these findings using matched employer employee data we show that foundation owned companies are more stable employers pay their employees better and keep them for longer altogether the evidence indicates that foundation ownership is associated with more responsible business behaviour towards employees

replenishment and pricing policy for deteriorating items taking into account the time value of money abstract a deteriorating inventory model taking into account the time value of money is developed for a deterministic inventory system with price dependent demand this study applies the discounted cash flows dcf approach for problem analysis a heuristic approach is presented to derive the near optimal replenishment and pricing policy that tries to maximize the total net present value profit a numerical example is implemented to illustrate the theory

evidence on the determinants of credit terms used in interfirm trade trade credit is created whenever a supplier offers terms that allow the buyer to delay payment in this paper we document the rich variation in interfirm credit terms and credit policies across industries we examine empirically the firm s basic credit policy choices whether to extend credit or to require cash payment and if credit is extended whether to adopt simple net terms or terms with discounts for prompt payment we also examine determinants of variations in two part terms results are supportive primarily of theories that explain credit terms as contractual solutions to information problems concerning product quality and buyer creditworthiness trade credit has important economic significance from both micro and macroeconomic perspectives during the 1990s vendor financing has accounted for an average 1 5 trillion of the book value of all assets of u s corporations and has represented approximately 2 5 times the combined value of all new public debt and primary equity issues during a given year as a component of the money supply trade credit in the form of accounts payable exceeds the primary money supply mi by a factor of 1 5 on average 1 clearly efforts to control economic growth through monetary policy can be confounded by aggregate decisions of businesses to increase or decrease reliance on trade credit financing several recent empirical studies examine determinants of firm reliance on trade credit 2 these studies model supply and demand for trade credit using financial statement data accounts receivable and payable 3 however many aspects of trade credit practice are unexplored most notably little is known about the types of credit terms e g net 30 2 10 net 30 and credit policies that are observed across firms and industries the only comprehensive doc

the newsvendor game has a nonempty core we settle an open conjecture regarding the newsvendor game we prove that its core is always non empty for all possible joint distributions of the random demands we give sufficient conditions under which the core is a singleton or it contains non negative elements

the competitive newsboy we consider a competitive version of the classical newsboy problem in which a firm must choose an inventory or production level for a perishable good with random demand and the optimal solution is a fractile of the demand distribution and investigate the impact of competition upon industry inventory a splitting rule specifies how initial industry demand is allocated among competing firms and how any excess demand is allocated among firms with remaining inventory we examine the relation between equilibrium inventory levels and the splitting rule and provide conditions under which there is a unique equilibrium our most general result is that if all excess demand is reallocated i e there is perfect substitutability then competition never leads to a decrease in industry inventory

trade credit and informational asymmetry commonly used trade credit terms implicitly define a high interest rate that operates as an efficient screening device where information about buyer default risk is asymmetrically held by offering trade credit a seller can identify prospective defaults more quickly than if financial institutions were the sole providers of short term financing the information is valuable in cases where the seller has made nonsalvageable investments in buyers since it enables the seller to take actions to protect such investments traditional explanations for the widespread use of trade credit fall into two categories the financing motive holds that capital market imperfections enable sellers to finance buyer purchases at lower cost than financial institutions ferris 4 argues that trade credit provides payment flexibility and thus reduces the overall need for buyers and sellers to maintain precautionary balances emery 3 contends that noncompetitive rents of financial institutions can be circumvented by sellers and buyers through provision of trade credit however the financing motive is not sufficient to explain why small suppliers offer trade credit the wide cross sectional variation in terms or why large buyers often take the prompt payment discount late a second set of explanations is best described as pricing motivations for trade credit provision nadiri 10 argues that availability of alternative payment terms can increase product demand but does not indicate why the offered terms could not be duplicated by financial institutions schwartz and whitcomb 14 argue that trade credit is used to circumvent robinson patman and similar prohibitions on price discrimination the correctness of this position depends on the charge to users of trade credit exceeding the cost of provision by the seller although the explanation is possible in principle an empirical question remains as to why variations in actual credit terms appear to be based on product market rather than buyer characteristics the literature also contains analyses of the impact of changing macroeconomic conditions on trade credit terms and aggregate credit flows schwartz 13 for example employs a financing motive for trade credit to conclude that restrictive monetary policy can be partly mitigated by liberalization of trade credit terms by firms with relatively easy access to capital markets however a microeconomic

stochastic programming for decentralized newsvendor with transshipment abstract this paper discusses a family of two stage decentralized inventory problems using a unifying framework taxonomy depicted as a multilevel graph this framework allows us to model and link different problems of competing retailers who independently procure inventory in response to uncertain demand and anticipated inventory decisions of other retailers in this family of problems in the ex post stage the retailers exercise recourse actions in response to the realized demand and competitors chosen procurement levels for example retailers could coordinate inventory transshipment to satisfy shortage with overage based on profit sharing agreements our framework provides a unifying parsimonious view using a single methodological prism for a variety of problems equally importantly as recourse options are laid out our framework clarifies and contributes a modeling connection between problems in a clear taxonomy of models this unifying perspective explicitly links work that appeared in isolation and offers future research directions

cooperation in service systems we consider a number of servers that may improve the efficiency of the system by pooling their service capacities to serve the union of the individual streams of customers this economies of scope phenomenon is due to the reduction in the steady state mean total number of customers in the system the question we pose is how the servers should split among themselves the cost of the pooled system when the individual incoming streams of customers form poisson processes and individual service times are exponential we define a transferable utility cooperative game in which the cost of a coalition is the mean number of customers or jobs in the pooled system we show that despite the characteristic function is neither monotone nor concave the game and its subgames possess nonempty cores in other words for any subset of servers there exist cost sharing allocations under which no partial subset can take advantage by breaking away and forming a separate coalition we give an explicit expression for all infinitely many nonnegative core cost allocations of this game finally we show that except for the case where all individual servers have the same cost there exist infinitely many core allocations with negative entries and we show how to construct a convex subset of the core where at least one server is being paid to join the grand coalition

optimal production for manufacturers considering consumer environmental awareness and green subsidies abstract manufacturers provide products that have distinct green levels i e higher degree of environmental friendliness to satisfy consumer demands with different green preferences a product with a higher green level generate fewer emissions but have higher costs to encourage those manufacturers to produce environmentally friendly products a government can implement subsidy policies this paper focuses on the decision making problem faced by manufacturers to determine which levels of green products to produce and production quantities at each green level we develop an optimization model under oligopolistic competition considering green preferences and subsidies with the objective of profit maximization for the manufacturers we prove the existence and uniqueness of equilibrium and propose a converged algorithm with theory of finite dimensional variational inequality numerical results show that an increase of consumer environmental awareness will incentivize manufacturers to produce more green products with higher green levels but this does not necessarily lead to higher profits for the manufacturers moreover a well designed subsidy policy can not only generate more profits for manufacturers but also save subsidy investment for the government in addition with the changes of consumer environmental awareness or and subsidy policy manufacturers may obtain more profits even if the competition is more fierce

the cost allocation problem for the first order interaction joint replenishment model we consider an infinite horizon deterministic joint replenishment problem with first order interaction under this model the setup transportation reorder cost associated with a group of retailers placing an order at the same time equals some group independent major setup cost plus retailer dependent minor setup costs in addition each retailer is associated with a retailer dependent holding cost rate the structure of optimal replenishment policies is not known thus research has focused on optimal power of two pot policies following this convention we consider the cost allocation problem of an optimal pot policy among the various retailers for this sake we define a characteristic function that assigns to any subset of retailers the average time total cost of an optimal pot policy for replenishing the retailers in the subset under the assumption that these are the only existing retailers we show that the resulting transferable utility cooperative game with this characteristic function is concave in particular it is a totally balanced game namely this game and any of its subgames have nonempty core sets finally we give an example for a core allocation and prove that there are infinitely many core allocations

the impact of stakeholder power on corporate reputation a cross country corporate governance perspective corporate reputation has roots in national beliefs about the role of the business corporation in society these beliefs are constructed in accordance with the preferences of powerful stakeholders building on a stakeholder power approach to corporate governance we investigate whether differences in the legal rights and protections of shareholders creditors and workers across countries affect the general public s reputation assessments of business corporations using a sample of 593 of the largest publicly traded companies in the world from 32 countries during 2007 to 2011 we find that in societies where shareholders enjoy a high degree of legal rights the impact of stock market returns on corporate reputation becomes more positive likewise the negative relationship between earnings volatility and reputation becomes greater when creditor rights are stronger contrary to expectations we found no evidence of an interaction effect between labor rights and corporate social performance on corporate repu

a three stage model for a decentralized distribution system of retailers we present and study a three stage model of a decentralized distribution system consisting ofn retailers each of whom faces a stochastic demand for an identical product in the first stage before the demand is realized each retailer independently orders her initial inventory in the second stage after the demand is realized each retailer decides how much of her residual supply demand she wants to share with the other retailers in the third stage residual inventories are transshipped to meet residual demands and an additional profit is allocated our model is an extension of the two stage model of anupindi et al abz 2001 which implicitly assumes that all residuals enter the transshipment stage we show however that allocation rules in the third stage based on dual solutions which were used in the abz model may induce the retailers to hold back some of their residual supply demand in general we study the effect of implementing various allocations rules in the third stage on the values of the residual supply demand the retailers are willing to share with others in the second stage and the trade off involved in achieving an optimal solution for the corresponding centralized system

supply chain networks with corporate financial risks and trade credits under economic uncertainty abstract the focus of this paper is to provide an analytical framework which can be used to investigate how financial risks affect the values of interconnected supply chain firms from a network perspective and how financial risks affect the supply chain firms profitability as well as the cash and credit transactions in particular we develop a variational inequality equilibrium model in conjunction with capital asset pricing model capm and the net present value npv to determine the optimal supply chain prices profits and implicit equity values of supply chain firms under financial risks and economic uncertainty we illustrate the analytical framework with computational studies which yield interesting managerial implications to the following questions 1 how do financial risks and economic uncertainty affect the values of interconnected supply chain firms from a network perspective 2 how do financial risks and economic uncertainty affect the supply chain firms profitability as well as the cash and credit transactions 3 how does the effect of financial risks change under different competition scenarios

financial networks with intermediation risk management with variable weights in this paper we develop a framework for the modeling analysis and computation of solutions to multitiered financial network problems with intermediaries in which both the sources of financial funds as well as the intermediaries are multicriteria decision makers in particular we assume that these decision makers seek not only to maximize their net revenues but also to minimize risk with the risk being penalized by a variable weight we make explicit the behavior of the various decision makers including the consumers at the demand markets for the financial products we derive the optimality conditions and demonstrate that the governing equilibrium conditions of the financial network economy can be formulated as a finite dimensional variational inequality problem qualitative properties of the equilibrium financial flow and price pattern are provided a computational procedure that exploits the network structure of the problem is proposed and then applied to several numerical examples

employee ownership and the drive to do business responsibly a study of the john lewis partnership as a means towards revealing both the strategic and the day to day operational practicalities of managing a responsible business this paper reports on research conducted over an extended period in the john lewis partnership jlp this is a major retail organization based in the uk which operates at scale 90 000 employees and annual sales of 11bn it has sustained itself as an employee owned enterprise for nearly a century and it makes explicit claims to conduct itself in a responsible manner which differs markedly from the notions of responsibility maintained by many conventional businesses but what do these commitments mean in practice and what compromises if any do they entail or require and crucially how are these tensions managed we find that there are many lessons that conventional organizations could learn from this case and yet we also show that the process of managing in this responsible way is a practical accomplishment that requires considerable conceptual and applied skills

focusing the financial flow of supply chains an empirical investigation of financial supply chain management the objective of this paper is to establish a theoretical foundation for financial supply chain management fscm in order to strengthen managerial decisions concerning financial flows in supply chains although such decisions are made frequently and partial aspects of fscm are already understood in business practice empirical knowledge about fscm is in its early stages the study provides fundamental information derived from eight case studies based on 40 interviews the analysis extends previous studies of the interface between operations management and finance by i contributing to a mid range theory of fscm by exploring two distinct but not exclusive fscm categories their antecedents and performance effects ii empirically deriving a testable framework for fscm iii relating fscm to established theories in the field of scm and iv basing the analysis on transaction cost economics managerial insights reveal that weak working capital causes firms to focus on fscm more specifically the study identifies two fscm categories pre shipment fscm before invoice release and post shipment fscm after invoice release managers can improve upstream supply chain working capital with pre shipment fscm whereas post shipment fscm strengthens the buying firm s working capital position based on transaction cost economics we analyze how these improvements stem from risk reductions which are more effective if firms are integrated internally and externally

externalities tangible externalities and queue disciplines externalities are the marginal costs that a user of a common resource imposes on others we introduce the efficient measure of tangible externalities that are the costs that a user imposes on others while being served then for a single server queueing system under various service disciplines we compute the expected externalities and the expected tangible externalities conditioning on the length of the service requirement

on the cooperation of recycling operations abstract this paper addresses two important issues that may affect the operations efficiency in the recycling industry first the industry contains many small scale and inefficient recycling firms especially in developing countries second the output from recycling a waste product often yields multiple recycled products that cannot all be sold efficiently by a single firm to address these two issues this paper examines how different firms can cooperate in their recycling and pricing decisions using cooperative game theory recycling operations under both joint and individual productions with different cost structures are considered decisions include the quantity of waste product to recycle and the price at which to sell each recycled product on each firm s market these decisions can be made jointly by multiple cooperating firms to maximize total profit we design allocation schemes for maximized total profit to encourage cooperation among all firms managerial insights are provided from both environmental and economic perspectives

an eoq model under retailer partial trade credit policy in supply chain abstract the main purpose of this paper is to investigate the retailer s inventory policy under two levels of trade credit to reflect the supply chain management situation in this paper we assume that the retailer has the powerful decision making right so we extend the assumption that the retailer can obtain the full trade credit offered by the supplier and the retailer just offers the partial trade credit to his her customer then we investigate the retailer s inventory system as a cost minimization problem to determine the retailer s optimal inventory policy under the supply chain management two easy to use theorems are developed to efficiently determine the optimal inventory policy for the retailer we deduce some previously published results of other researchers as special cases finally numerical examples are given to illustrate the theorems and obtain a lot of managerial phenomena

paying the price the impact of controversial governance practices on managerial reputation this study directly examines the reputational penalties that managers pay when they engage in controversial governance practices that raise questions about managerial self interest these penalties

cooperation between multiple news vendors with transshipments we study a situation with n retailers each of them facing a news vendor problem i e selling to customers over a finite period of time product with a short life cycle such as fashion groups of retailers might improve their expected joint profit by coordinating their orders followed by transshipments after demand realization is known we analyze these situations by defining a cooperative game called a general news vendor game for such a situation with n retailers we concentrate on whether it makes sense to cooperate by studying properties of general news vendor games our main result states that general news vendor games have non empty cores

why do firms have purpose the firm s role as a carrier of identity and reputation abstract this article develops a theory in which a firm s adoption of a prosocial purpose can increase profitability by strengthening employees reputation and identity leading to higher effort and

inventory models with variable lead time and present value the figures for inventory make up a huge proportion of a company s working capital because of this we formulated the optimal replenishment policy considering the time value of money to represent opportunity cost in this article we provide a mixed inventory model in which the distribution of lead time demand is normal to consider the time value first the study tries to find the optimal reorder point and order quantity at all lengths of lead time with components crashed to their minimum duration secondly we develop a method to insure the uniqueness of the reorder point to locate the optimal solution finally some numerical examples are given to illustrate our findings

production inventory games a new class of totally balanced combinatorial optimization games in this paper we introduce a new class of cooperative games that arise from production inventory problems several agents have to cover their demand over a finite time horizon and shortages are allowed each agent has its own unit production inventory holding and backlogging cost cooperation among agents is given by sharing production processes and warehouse facilities agents in a coalition produce with the cheapest production cost and store with the cheapest inventory cost we prove that the resulting cooperative game is totally balanced and the owen set reduces to a singleton the owen point based on this type of allocation we find a population monotonic allocation scheme for this class of games finally we point out the relationship of the owen point with other well known allocation rules such as the nucleolus and the shapley value

shipment consolidation who pays for it and how much this paper examines the subject of cost allocation in a multiple product inventory system allowing for consolidation of shipments if we order multiple items using an economic order quantity eoq policy and consolidate shipments part of the ordering cost is shared and part is specific to each item we want to find the consolidation choice with optimal total cost and divide the cost fairly among the individual items such a fair division is central to a costing system in which no group of items subsidizes the others there are no free riders we use a cooperative inventory game to determine when this can be done this game is usually not concave so we want to know what consolidation combinations determine when this cost can be fairly divided using the core of the game we prove that consolidation of all the items is cheaper exactly if there are fair cost allocations core of the game is not empty which happens when the portion of the ordering cost common to all items is not too small we further show how sensitive the nonempty core result is to adjustments in the cost parameters and show how to determine a threshold value for the shared ordering cost which assures the existence of a fair cost allocation

production and inventory model using net present value using the net present value is the standard methodology in theoretical analysis and the most frequently used method for making financial decisions however net present value is rarely used in production and inventory decisions the main reasons appear to be the complexity of the formulae and the robustness of the eoq model we investigate the general multiproduct multistage production and inventory model using the net present value of its total cost as the objective function a power of two heuristic gives us a near optimal solution to this problem if the base period is fixed or varied the solution based on the best power of two heuristic will be within 6 2 or 2 1 of the optimal this result is surprisingly similar to models using the long term average cost the average cost does not reflect the time value of money does this mean that decisions based on average cost are significantly inferior to those based on net present value the answer is quite surprising if we include discounted production cost in the holding cost it turns out that the decision based on average cost is only 9 6 in terms of the net present value of the total cost worse than the decision based on the net present value however the reorder interval based on the average cost could be much longer than that derived using net present value this result shows that average cost is a good approximation to the net present value when the demands are deterministic

who s responsible for irresponsible business an assessment the source of irresponsible business is a systems failure involving an ill conceived interface between government the law investors and firms addressing this systemic failure requires reform of our capitalist system to build a partnership between the four parties that recognizes the function of each and how they should coalesce together

a characterization of the shapley value in queueing problems a set of agents stand to receive a service no two agents can be served simultaneously a queue has been organized and agents having to wait should receive monetary compensations we characterize the rule assigning positions in the queue and compensations corresponding to the payoffs recommended by the shapley value of the associated cooperative game

stackelberg solution in a vendor buyer supply chain model with permissible delay in payments abstract in practice vendors or sellers often offer their buyers a fixed credit period to settle the account the benefits of trade credit are not only to attract new buyers but also to avoid lasting price competition on the other hand the policy of granting a permissible delay adds not only an additional cost but also an additional dimension of default risk to vendors in this paper we will incorporate the fact that granting a permissible delay has a positive impact on demand but negative impacts on both costs and default risks to establish vendor buyer supply chain models then we will derive the necessary and sufficient conditions to obtain the optimal solution for both the vendor and the buyer under non cooperative stackelberg equilibrium finally we will use two numerical examples to show that 1 granting a permissible delay may significantly improve profits for both the vendor and the buyer 2 the sensitivity analysis on the optimal solution with respect to each parameter and 3 the comparisons between nash and stackelberg solutions

enjoying the quiet life corporate governance and managerial preferences much of our understanding of corporations builds on the idea that managers when they are not closely monitored will pursue goals that are not in shareholders interests but what goals would managers pursue this paper uses variation in corporate governance generated by state adoption of antitakeover laws to empirically map out managerial preferences we use plant level data and exploit a unique feature of corporate law that allows us to deal with possible biases associated with the timing of the laws we find that when managers are insulated from takeovers worker wages especially those of white collar workers rise the destruction of old plants falls but the creation of new plants also falls finally overall productivity and profitability decline in response to these laws our results suggest that active empire building may not be the norm and that managers may instead prefer to enjoy the quiet life

multiperiod effects of corporate social responsibility on supply chain networks transaction costs emissions and risk abstract this paper develops a framework for the analysis of the optimal levels of corporate social responsibility csr activities in a multiperiod supply chain network consisting of manufacturers retailers and consumers manufacturers and retailers determine their production quantities transaction quantities and the amount of social responsibility activities they want to pursue that maximize net return minimize emission and minimize risk over the planning horizon we investigate the interplay of the heterogeneous decision makers and compute the equilibrium pattern of product outputs transactions prices and levels of social responsibility activities the paper provides insights concerning the optimal allocation of resources to csr activities when considering a multiperiod time frame

is bigger better customer base expansion through word of mouth reputation a model of gradual reputation formation through a process of continuous investment in product quality is developed we assume that the ability to produce high quality products requires continuous investment and that as a consequence of informational frictions such as search costs information about firms past performance diffuses only gradually in the market this leads to a dual process of growth of a firm s customer base and an increase in the firm s investment in quality the model predicts therefore that the longer its tenure as a high quality producer the more a firm invests in quality we relate this finding to empirical work on online commerce as well as on traditional industries