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 dynamic pricing of inventories with stochastic demand over finite horizons in many industries managers face the problem of selling a given stock of items by a deadline we investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm s objective is to maximize expected revenues examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry which markets space such as seats on airline flights cabins on vacation cruises and rooms in hotels that become worthless if not sold by a specific time we formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity resp price as a function of the stock level and the length of the horizon for a particular exponential family of demand functions we find the optimal pricing policy in closed form for general demand functions we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity finally we extend our results to the case where demand is compound poisson only a finite number of prices is allowed the demand rate is time varying holding costs are incurred and cash flows are discounted the initial stock is a decision variable and reordering overbooking and random cancellations are allowed

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

reducing the mean supply delay of spare parts using lateral transshipments policies lateral transshipment has been studied lately as a promising policy for increasing the performances of multi echelon spare parts inventory system by lateral transshipment spare parts can be moved from one location with excess inventory to another location at the same echelon in shortage with the aim of reducing supply delays of spare parts this paper will examine the relative effectiveness of two lateral shipments approaches in reducing the mean supply delay msd of a non repairable item with respect to a classical policy of no lateral shipments a simulation model of a two echelon supply network has been implemented and an experiment has been performed by varying different parameters of the supply network such as the number of warehouses locations at the lower echelon the supply lead time from the central depot the spare parts demand uncertainty and the size variability of the warehouses results show appreciable reductions of msd when lateral shipments are allowed with respect to the classical policy in almost every network configuration

optimal dynamic pricing for perishable assets with nonhomogeneous demand we consider a dynamic pricing model for selling a given stock of a perishable product over a finite time horizon customers whose reservation price distribution changes over time arrive according to a nonhomogeneous poisson process we show that at any given time the optimal price decreases with inventory we also identify a sufficient condition under which the optimal price decreases over time for a given inventory level this sufficient condition requires that the willingness of a customer to pay a premium for the product does not increase over time in addition to shedding managerial insight these structural properties enable efficient computation of the optimal policy numerical studies are conducted to show the revenue impact of dynamic price policies price changes are set to compensate for statistical fluctuations of demand and to respond to shifts of the reservation price for the former our examples show that using optimal dynamic optimal policies achieves 2 4 7 3 revenue improvement over the optimal single price policy for the latter the revenue increase can be as high as 100 these results explain why yield management has become so essential to fashion retailing and travel service industries

a simple heuristic for joint inventory and pricing models with lead time and backorders we study a joint inventory and pricing problem in a single stage system with a positive lead time we consider both additive and multiplicative demand forms this problem is in general intractable due to its computational complexity we develop a simple heuristic that resolves this issue the heuristic involves a myopic pricing policy that generates each period s price as a function of the initial inventory level and a base stock policy for inventory replenishment in each period the firm monitors its so called price deflated inventory position and places an order to reach a target base stock level the price deflated inventory position weights the on hand and pipeline inventory according to a factor that reflects the sensitivity of price to the net inventory level to assess the effectiveness of our heuristic we construct an upper bound to the exact system the upper bound is based on an information relaxation approach and involves a penalty function derived from the proposed heuristic a numerical s

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

optimal dynamic pricing of perishable products with stochastic demand and a finite set of prices abstract consider a continuous time inventory problem in which a retailer sets the price on a fixed number of a perishable asset that must be sold prior to the time at which it perishes the retailer can dynamically adjust the price between any of a finite number of allowable prices demand for the product is poisson with an intensity that is inversely related to the price the optimal policy is piecewise constant the maximum expected revenue is nondecreasing and concave in both the remaining inventory and the time to go for a given inventory level the optimal price declines as the time at which the products perish approaches at any given time the optimal price is nonincreasing in the number of items remaining unsold these results are extended to i the case in which the prices and corresponding demand intensities depend on the time to go and ii the case in which the retailer can restock to meet demand at a unit cost after the initial inventory has been sold

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

retail pricing and clearance sales sellers of new products are faced with having to guess demand conditions to set price appropriately but sellers are able to adjustprice over time and to learn from past mistakes additionally it is not necessary that all goods be sold with certainty it is sometimes better to set a high price and to risk no sale this process is modeledto explain retail pricing behavior and the time distribution of transactions prices start high and fall as a function of time on theshelf the initial price and rate of decline can be predicted and depends on thinness of the market the proportion of customers who are window shoppers and other observable characteristics copyright 1986 by american economic association

the core of an economy with transaction costs this paper defines a new concept of the core for an economy with transaction costs and uses this concept to prove a limit theorem for sequences of replica economies in this way it provides a rationale for a definition of equilibrium in which agents face a sequence of budget constraints since economies with incomplete markets are special cases of economies with transaction costs the limit theorem also provides a rationale for radner s equilibrium of plans prices and price expectations

the effects of selling packaged goods on inventory decisions in this paper we study within a newsboy type modeling framework the common business practice of retail firms to sell products not only as independent items but also as part of multiproduct packets packaged goods our emphasis is on understanding the effects of such practices on the inventory decisions of the firm we provide insights on the resulting level of suboptimality when inventory decisions are made with demand information only on the independent items and without accounting for the demand substitution structure induced between independent items and packaged goods our stylized model studies an environment with two products that are not direct substitutes for each other sold either independently or as part of a packet that contains one unit of each we provide necessary and sufficient optimality conditions for this model and suggest an efficient numerical search for obtaining the optimal stocking levels an extensive computational study allowed us to provide insights on the nature of the optimal stocking policies the suboptimality of independent newsboy policies the effects of demand correlation among individual products and multiproduct packets and the determining role of induced substitution structure among products during stockout occasions on the profitability of the inventory system

migration remittances and the family remittances by migrants along with migration itself are elements in a migrant familys intertemporal contractual arrangement the reasons why the migrant and his family voluntarily enter into a mutually beneficial contractual arrangement with each other rather than with a 3rd party are discussed and the conditions under which the contractual arrangement is self enforcing are identified both parties can usually benefit from a number of pareto efficient mutual contractual arrangements this gives rise to an indeterminacy problem solved through a bargaining process between the parties who consequently converge to a contractual arrangement implying a specific flow of migrant to family remittances the chosen contractual arrangement reflects the relative bargaining powers of the parties and variables impinging upon these powers thus bear upon remittances in the light of these arguments tests are conducted on observed remittance behavior across individual migrants in botswana authors

dynamic capacity management with substitution we examine a multiperiod capacity allocation model with upgrading there are multiple product types corresponding to multiple classes of demand and the firm purchases capacity of each product before the first period within each period after demand arrives products are allocated to customers customers who arrive to find that their product has been depleted can be upgraded by at most one level we show that the optimal allocation policy is a simple two step algorithm first use any available capacity to satisfy same class demand and then upgrade customers until capacity reaches a protection limit so that in the second step the higher level capacity is rationed we show that these results hold both when all capacity is salvaged at the end of the last demand period as well as when capacity can be replenished in the latter case an order up to policy is optimal for replenishment although finding the optimal protection limits is computationally intensive we describe bounds for the optimal protection limits that take little effort to compute and can be used to effectively solve large problems using these heuristics we examine numerically the relative value of strictly optimal capacity and dynamic rationing the value of perfect demand information and the impact of demand and economic parameters on the value of optimal substitution

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

simulation study of the price differentiation effect in a stochastic deteriorating inventory with heterogeneous consumers freshness sensitivity a fixed price policy regardless of expiration date may result in unsold inventory and sales loss price reduction over time as the expiration date approaches motivates customers to purchase all items including the ones that are left with only a short interval until their expiration we conduct a discrete event simulation that captures the main characteristics of this phenomenon results show that a moderate differentiation of price increases profits by 6 a larger differentiation reduces profits profits are the highest for freshness oriented customers a fixed price policy is preferred in an environment of large variance and expected near term expirations

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

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

managing and reallocating inventory across two markets with local information abstract consider a firm that controls inventory centrally for two separate markets that are managed by regional managers having local demand information the central planner provides a dedicated inventory level to each market to ensure a minimum service level but can reallocate inventory once associated demands are filled how should such a firm solicit regional managers to share their local information so inventory levels can be set efficiently in this paper we study a forecast sharing game in such a firm where demand information lies within regions and inventory is managed by a central decision maker we show that incentives are misaligned and truthful information sharing is not an equilibrium we study two potential ways to improve the system a regional managers directly place orders rather than simply passing demand forecasts or b a pricing scheme for inventory reallocations is imposed we show that under direct ordering a unique pure strategy bayesian nash equilibrium exists and makes retailers place orders based on their true forecasts although the requested order quantities are not system optimal e g some inventory pooling benefits are lost under an endogenous transfer pricing mechanism set by the central planner we find that a first best truth telling equilibrium is possible under certain conditions we conduct a numerical study to examine the different cases and find that when the critical fractile is high direct ordering results in lower inventories while the reverse is true when the critical fractile is low expected profit comparisons show the value of local information

the existence of equilibrium without free disposal in economies with transaction costs and incomplete markets this paper presents a general model of an economy with transaction costs and proves the existence of a competitive equilibrium using t c bergstrom s procedure to discard the free disposal assumption since economies with incomplete markets are shown to be special cases of economies with transaction costs this result is used to discuss the conditions for the existence of an equilibrium in economies with incomplete markets copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

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

export restrictions do consumers really benefit the wheat to bread supply chain in serbia abstract our approach combines price transmission and gross margin analysis at different stages of the wheat to bread supply chain results suggest that the effects of export restrictions on the end consumer prices for bread and thus food price inflation heavily depend on the price behavior of the intermediates in contrast to theory consumers in serbia experienced welfare losses despite comprehensive governmental market interventions in particular consumers were confronted with increasing flour and bread prices which cannot be fully explained by increasing production costs whereas mills bakeries and retailers increased their profits thus export controls in combination with high price volatility in the supply chain have to be considered as a further factor driving food price inflation

stocking decisions for low usage items in a multilocation inventory system this research shows that organizations with a number of sister plants warehouses or other stocking points can profit from the concept of proactive use of transshipments as an element of their inventory control policy for certain types of parts employing transshipments can significantly reduce the total inventory needed throughout the entire collection of stocking points the study is motivated by a real life situation involving a large utility company having 29 power generating plants in five southeastern states where there are thousands of parts that are commonly used at multiple plants at present each plant operates independently and maintains enough stock to meet its own requirements transshipments take place between plants whenever there is an emergency requirement for a part but no explicit consideration is given to this effect while deciding on stocking levels at different plants in the case we examined by setting stocking levels to explicitly take account of transshipments total system cost could be reduced by about 70 over the company s decentralized policy in general this work considers a single echelon n location continuous review inventory system in which complete pooling of stock is permitted among the locations a model is developed for slow moving expensive and consumable parts that are common to two or more locations a one for one ordering policy and queueing theory allow development and solution of a system of equations for the probability distribution of net inventory at each location a heuristic procedure is also developed to determine cost effective stocking levels actual data from the utility company are used to demonstrate the applicability of the model savings achieved as a result of pooling are reported

wheat export restrictions and domestic market effects in russia and ukraine during the food crisis abstract studies investigating the effects of wheat export controls on the domestic market in the exporting country itself are scarce this paper analyses the domestic market impact of wheat export controls in russia and ukraine during the 2007 2008 global food crisis within a spatial price transmission approach using a markov switching vector error correction model we contrast our estimation for russia and ukraine with germany and the usa two countries that did not intervene in their wheat export markets an explicit crisis regime during times of export controls is exclusively identified for russia and ukraine we find that export restrictions temporarily reduced the degree of integration of russian and ukrainian domestic markets in world wheat markets which pushed the growers prices below their long run equilibrium level further domestic markets were disconnected from their equilibrium and market instability increased these effects were even more pronounced and long lasting in ukraine export quota than in russia export tax the negative market effects discouraged private investors thereby preventing russia and ukraine from maximizing their grain potential and contributing to global food security

clearance pricing and inventory policies for retail chains clearance pricing and end of season inventory management are challenging and important problems in retailing sales rates depend upon price seasonal effects and the remaining assortment of items available to customers there is little time to react to observed sales and pricing errors result in either loss of potential revenue or excess inventory to be liquidated this paper develops optimal clearance prices and inventory management policies that take into account the impact of reduced assortment and seasonal changes on sales rates versions of these policies have been tested and implemented at three major retail chains and these applications are summarized and discussed

optimal joint inventory and transshipment control under uncertain capacity in this paper we address the optimal joint control of inventory and transshipment for a firm that produces in two locations and faces capacity uncertainty capacity uncertainty e g due to downtime quality problems yield etc is a common feature of many production systems but its effects have not been explored in the context of a firm that has multiple production facilities we first characterize the optimal production and transshipment policies and show that uncertain capacity leads the firm to ration the inventory that is available for transshipment to the other location and characterize the structure of this rationing policy then we characterize the optimal production policies at both locations which are defined by state dependent produce up to thresholds we also describe sensitivity of the optimal production and transshipment policies to problem parameters and in particular explain how uncertain capacity can lead to counterintuitive behavior such as produce up to limits decreasing for locations that face stochastically higher demand we finally explore through a numerical study when the optimal policy is most likely to yield significant benefits compared to simple policies

optimal replenishment and rework with multiple unreliable supply sources we study a production inventory system with multiple unreliable supply sources through inspection and rework the system can improve the quality of the units received from the supply sources there are two interleaved decisions the replenishment quantities from the sources and the inspection rework quantities among the units received we show the optimal solution to the replenishment decision can be efficiently derived from a greedy algorithm and inspection rework is optimally applied to a single source identified by the algorithm furthermore in the case of linear cost functions it is optimal to place orders from two supply sources i e dual sourcing the results extend to the infinite horizon case where an order up to policy is optimal the model also readily adapts to situations in which the supply imperfection takes the form of a reduced delivery quantity yield loss

the multiperiod multilocation inventory problem this paper studies the structure of optimal policies in general multiperiod multilocation inventory problems with proportional costs it is shown that the multiperiod problem has the same generic form in each period as a one period problem hence properties of the one period problem are inherited by the multiperiod formulation in particular the form of the optimal policy can be characterized in the special case of a leontief system structure and for a somewhat more general class it is shown that base stock policies are optimal for certain initial states for the stationary problem some results are derived about the monotonicity of the sequence of base stock vectors

managing inventories with one way substitution a newsvendor analysis abstract this paper presents an insightful approach to analyze two item periodic inventory systems with one way substitution the objective is to minimize the expected total cost per period which consists of expected purchasing costs expected inventory holding costs expected shortage costs and expected adjustment costs this approach helps derive the optimality conditions in both single period and infinite horizon settings and yields useful insights into the impact of substitution on the service level the optimality of a borderline case in which the order up to level of the inflexible item is reduced to zero and the pivotal role of the purchasing cost

approximations of dynamic multilocation production and inventory problems consider a central depot or plant which supplies several locations experiencing random demands orders are placed or production is initiated periodically by the depot the order arrives after a fixed lead time and is then allocated among the several locations the depot itself does not hold inventory the allocations are finally received at the demand points after another lag unfilled demand at each location is backordered linear costs are incurred at each location for holding inventory and for backorders also costs are assessed for orders placed by the depot the object is to minimize the expected total cost of the system over a finite number of time periods this system gives rise to a dynamic program with a state space of very large dimension we show that this model can be systematically approximated by a single location inventory problem all the qualitative and quantitative results for such problems can then be applied

revenue management under a general discrete choice model of consumer behavior customer choice behavior such as buy up and buy down is an important phenomenon in a wide range of revenue management contexts yet most revenue management methodologies ignore this phenomenon or at best approximate it in a heuristic way in this paper we provide an exact and quite general analysis of this problem specifically we analyze a single leg reserve management problem in which the buyers choice behavior is modeled explicitly the choice model is very general simply specifying the probability of purchase for each fare product as a function of the set of fare products offered the control problem is to decide which subset of fare products to offer at each point in time we show that the optimal policy for this problem has a quite simple form namely it consists of identifying an ordered family of efficient subsets s 1 s m and at each point in time opening one of these sets s k where the optimal index k is increasing in the remaining capacity x and decreasing in the remaining time that is the more capacity or less time available the further the optimal set is along this sequence we also show that the optimal policy is a nested allocation policy if and only if the sequence of efficient sets is nested that is s 1 s 2 s m moreover we give a characterization of when nesting by fare order is optimal we also develop an estimation procedure for this setting based on the expectation maximization em method that jointly estimates arrival rates and choice model parameters when no purchase outcomes are unobservable numerical results are given to illustrate both the model and estimation procedure

estimating demand by using sales information inaccuracies encountered abstract demand data is integral to a company s overall information requirement this is particularly true for manufacturers and retailers with regard to capacity production and inventory planning notwithstanding the implicit inaccuracies encountered companies are predisposed to employ sales data as a primary source of information for estimating future demand in this paper by adopting a two product setting we measure inventory cost inaccuracies that arise from using sales data in estimating demand by analyzing these costs we also explore the conditions under which the resulting inaccuracies are either lessened or become acute in this context the determining rule of an induced substitution structure between the two products during stockout occasions is explicitly analyzed we use a newsboy framework in a two product environment wherein one product may be taken as a direct substitute for the other we provide necessary and sufficient optimality conditions and an extensive computational study to illustrate and support our findings and to provide additional insights on the conditions characterizing optimal stocking policies

entry timing in a secondary market when to trade abstract in volatile long lead time and short selling season markets a secondary market enables buyers to update their inventory during the selling season the decision of when to update involves complicated trade offs between forecast accuracy expected lost sales and average purchasing cost we use a two stage inventory replenishment model to identify the optimal trading time across different scenarios across most scenarios the optimal trading time is around the midpoint of the season and is sensitive to the expected profit margin and demand forecast errors we discuss the impacts of the timing decision on upstream suppliers sales and channel performance in terms of sales revenue and supply demand mismatch costs specifically secondary market trading always reduces upstream suppliers sales no matter when trading occurs but trading at an optimal time can maximize a secondary market s profit gain over the no trade scenario through reducing supply demand mismatch

a multi objective robust optimization model for multi product multi site aggregate production planning in a supply chain under uncertainty abstract manufacturers need to satisfy consumer demands in order to compete in the real world this requires the efficient operation of a supply chain planning in this research we consider a supply chain including multiple suppliers multiple manufacturers and multiple customers addressing a multi site multi period multi product aggregate production planning app problem under uncertainty first a new robust multi objective mixed integer nonlinear programming model is proposed to deal with app considering two conflicting objectives simultaneously as well as the uncertain nature of the supply chain cost parameters of the supply chain and demand fluctuations are subject to uncertainty then the problem transformed into a multi objective linear one the first objective function aims to minimize total losses of supply chain including production cost hiring firing and training cost raw material and end product inventory holding cost transportation and shortage cost the second objective function considers customer satisfaction through minimizing sum of the maximum amount of shortages among the customers zones in all periods working levels workers productivity overtime subcontracting storage capacity and lead time are also considered finally the proposed model is solved as a single objective mixed integer programming model applying the lp metrics method the practicability of the proposed model is demonstrated through its application in solving an app problem in an industrial case study the results indicate that the proposed model can provide a promising approach to fulfill an efficient production planning in a supply chain

newsvendor problem with clearance pricing abstract the newsvendor nv problem assumes that the salvage clearance price at which the leftover inventory is disposed of is a given parameter of the problem in this paper we relax this assumption and consider the nv problem with the salvage clearance price as a decision variable we have drawn from the literatures on the nv problem and clearance markdown dynamic pricing to develop three stochastic models in this paper in the first model we assume that while the seasonal demand is exogenous and stochastic the end of season demand is endogenous and deterministic the second model extends the first model by assuming that the end of season demand is endogenous and stochastic finally the third model considers that both the seasonal and end of season demands are endogenous and stochastic we have provided solution procedures for solving the stochastic optimization problems we have also performed sensitivity analyses to assess the sensitivity of the optimal expected profit and order quantity to different problem parameters specifically we have found that the optimal expected profit is most sensitive to the variable cost per unit mean seasonal demand and market potential of end of season demand our models will be useful for retailers of products with a short selling season and a short end of season period for clearance sale of leftover inventory such that there is a single replenishment opportunity at the beginning of the season and a single opportunity for setting the salvage price for clearance sale based on the leftover inventory and end of season demand pattern the paper is concluded with possible directions for future research

multi location transshipment problem with capacitated transportation abstract we consider coordination among stocking locations through replenishment strategies that take explicitly into consideration transshipments transfer of a product among locations at the same echelon level we incorporate transportation capacity such that transshipment quantities between stocking locations are bounded due to transportation media or the location s transshipment policy we model different cases of transshipment capacity as a capacitated network flow problem embedded in a stochastic optimization problem under the assumption of instantaneous transshipments we develop a solution procedure based on infinitesimal perturbation analysis to solve the stochastic optimization problem where the objective is to find the policy that minimizes the expected total cost of inventory shortage and transshipments such a numerical approach provides the flexibility to solve complex problems investigating two problem settings we show the impact of transshipment capacity between stocking locations on system behavior we observe that transportation capacity constraints not only increase total cost they also modify the inventory distribution throughout the network

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

coordinating clearance markdown sales of seasonal products in retail chains in this paper we propose a methodology to set prices of perishable items in the context of a retail chain with coordinated prices among its stores and compare its performance with actual practice in a real case study we formulate a stochastic dynamic programming problem and develop heuristic solutions that approximate optimal solutions satisfactorily to compare this methodology with current practices in the industry we conducted two sets of experiments using the expertise of a product manager of a large retail company in chile in the first case we contrast the performance of the proposed methodology with the revenues obtained during the 1995 autumn winter season in the second case we compare it with the performance of the experienced product manager in a simulation game setting in both cases our methodology provides significantly better results than those obtained by current practices

product diversion to a direct competitor a manufacturer will often limit competition among downstream partners by authorizing only a select group of retailers to carry its product however it is not uncommon for authorized retailers to create an additional competitor by diverting units to an unauthorized seller this paper presents an analytical model that demonstrates how diversion from authorized retailers to an unauthorized direct competitor can occur under circumstances not considered by the prior literature in fact diversion can represent a prisoner s dilemma whereby retailers diminish their own profit by selling to the unauthorized direct seller the authorized retailer s profit loss actually increases as the per unit diversion costs incurred by the authorized retailer decrease the model also shows that the unauthorized direct seller earns greater profit by strategically procuring a unilaterally constraining quantity even though this procurement strategy results in an equivalent increase in the quantity sold by the retailers combined the results identify a new reason for diversion and its consequences for retailers and the unauthorized direct seller

macroeconomic determinants of remittances evidence from romania given the globalization of the labour market and the promotion of free movement for work young people are looking for employment opportunities from at least two perspectives professional careers

optimal production pricing and substitution policies in continuous review production inventory systems abstract we consider the optimal production pricing and substitution policies of a continuous review production inventory system with two products a high end product and a low end product each product has its associated customer stream however the demands for the low end product may be satisfied by the high end product we formulate the problem as a markov decision process and characterize the structure of the optimal control policy which specifies when to produce for each product when to use the high end product as a substitute and how to set the optimal prices we show that a base stock production policy is optimal however the optimal base stock level for each product depends on the inventory level of the other product and it features a monotonic property we also demonstrate that the optimal substitution policy is a rationing policy with the rationing level depending on the total inventory amount we find that the optimal prices can be either decreasing or increasing in the inventory levels depending on the forms of demand functions furthermore we utilize numerical experiments to investigate the impact of different system characteristics on the benefits of using substitution and dynamic pricing finally we investigate when the dynamic pricing strategy and the substitution strategy are complements or substitutes

dynamic capacity management with general upgrading this paper studies a capacity management problem with upgrading a firm needs to procure multiple classes of capacities and then allocate the capacities to satisfy multiple classes of customers that arrive over time a general upgrading rule is considered i e unmet demand can be satisfied using multistep upgrade no replenishment is allowed and the firm has to make the allocation decisions without observing future demand we first characterize the structure of the optimal allocation policy which consists of parallel allocation and then sequential rationing specifically the firm first uses capacity to satisfy the same class demand as much as possible then considers possible upgrading decisions in a sequential manner we also propose a heuristic based on certainty equivalence control to solve the problem numerical analysis shows that the heuristic is fast and delivers close to optimal profit for the firm finally we conduct extensive numerical studies to derive insights into the problem it is foun

a new characterization of the efficiency of equilibrium with incomplete markets abstract this paper defines a new concept of efficiency for economies with incomplete markets called d efficiency which characterizes radner equilibrium allocations we show that these allocations are d efficient for some partition d of the set d of date event pairs and that under certain conditions any d efficient allocation may be decentralized as an equilibrium with lump sum transfers since any d efficient allocation is a social nash optimum our results generalize s j grossman s j econ theory 15 1977 1 15 characterization of efficiency also since for d d d efficiency coincides with full pareto efficiency we obtain sufficient conditions for radner equilibrium allocations to be pareto efficient

periodic pricing of seasonal products in retailing this paper studies intertemporal pricing policies when selling seasonal products in retail stores we first present a continuous time model where a seller faces a stochastic arrival of customers with different valuations of the product for this model we characterize the optimal pricing policies as functions of time and inventory we use this model as a benchmark against which we compare more realistic models that consider periodic pricing reviews we show that the structure of the optimal pricing policies in this case is consistent with the procedures observed in practice retail stores successively discount the product during the season and promote a liquidation sale at the end of the planning horizon we also show that the loss experienced when implementing periodic pricing reviews instead of continuous policies is small when the appropriate number of reviews is chosen several interesting economic insights emerge from our analysis for example uncertainty in the demand for new products leads to higher prices larger discounts and more unsold inventory finally we study the effect of announced discount policies on prices and profits we show that stores that have adopted this type of strategy usually set prices such that with high probability the merchandise is sold during the first periods and the largest discounts rarely take place

demand dynamics in the seasonal goods industry an empirical analysis this study develops and estimates a dynamic model of consumer choice behavior in markets for seasonal goods where products are sold over a finite season and availability is limited in these markets retailers often use dynamic markdown policies in which an initial retail price is announced at the beginning of the season and the price is subsequently marked down as the season progresses strategic consumers face a trade off between purchasing early in the season when prices are higher but goods are available and purchasing later when prices are lower but the stockout risk is higher if the good starts providing utility as soon as it is purchased e g apparel consumers purchasing earlier in the season can also get more use from the product compared to those purchasing later our structural model incorporates three features essential for modeling the demand for seasonal goods changing prices limited availability and possible dependence of total consumption utility on the time of purchase in this model heterogeneous consumers have expectations about future prices and product availability and they strategically time their purchases we estimate the model using aggregate sales and inventory data from a fashion goods retailer the results indicate that in the fashion goods context ignoring consumers expectations about future availability or the change in total consumption utility over the season can lead to biased demand estimates we find that strategic consumers delay their purchases to take advantage of markdowns and that these strategic delays hurt the retailer s revenues retailer revenues facing strategic consumers are 9 lower than they would have been facing myopic consumers limited availability on the other hand reduces the extent of strategic delays by motivating consumers to purchase earlier we find that the impact of strategic delays on retailer revenues would have been as high as 35 if there were no stockout risk by means of counterfactual experiments we show that the highest retailer profits are achieved by offering small markdowns early in the season on the other hand given current markdown percentages the retailer can improve profits by carrying less stock as consumers accelerate purchases and purchase at higher prices when they anticipate scarcity in future periods as long as the reduction in availability is not great the profit gain from earlier higher priced sales can overcome the loss resulting from the reduction in overall sales

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

multi location transshipment problem with capacitated production abstract we consider coordination among stocking locations through replenishment strategies that explicitly take into account lateral transshipments i e transfer of a product among locations at the same echelon level our basic contribution is the incorporation of supply capacity into the traditional transshipment model our goal is to analyze the impact on system behavior and on stocking locations performance of the fact that the supplier may fail to fulfill all the replenishment orders we therefore formulate the capacitated supply scenario as a network flow problem embedded in a stochastic optimization problem which is solved through a sample average approximation method we find that depending on the production capacity system behavior can vary drastically moreover in a production inventory system we find evidence that either capacity flexibility i e extra production or transshipment flexibility i e pooling is required to maintain a desired level of service

optimal policies for inventory systems with lateral transshipments using lateral transshipments can be beneficial in order to improve service levels and to reduce system costs this paper deals with a single echelon inventory system with two identical locations demands are generated by stationary and independent poisson processes in general if a demand occurs at a location and there is no stock on hand the demand is assumed to be backordered or lost however in this paper lateral transshipments serve as an emergency supply in case of stock out in this paper the rule for lateral transshipments is given while the ordering policies for normal replenishments are optimized the transshipment rule is to always transship when there is a shortage at one location and stock on hand at the other first we assume that the locations apply r q policies for normal replenishments and show that the optimal policies are not necessarily symmetric even though the locations are identical this means that one cannot in general assume that the optimal policy is symmetric under symmetric assumptions second we relax the assumption of r q policies and derive the optimal replenishment policy using stochastic dynamic programming

how to order and transship in multi location inventory systems the simulation optimization approach abstract the efficient control of multi location inventory systems with lateral transshipments has become increasingly important however existing models are analytically solvable only under simplifying assumptions there is a variety of heuristics to find approximate solutions but interdependencies between ordering and transshipment decisions for continuous time are not addressed thus we suggest using simulation optimization in our paper we describe a widely adaptable simulation model for mapping highly complex multi location inventory systems with lateral transshipments by applying this model to a special case from the literature and to some examples we show its validity and generality

on the efficiency of equilibrium with transaction costs this paper defines a concept of efficiency for economies with transactions costs called nash efficiency which characterizes in the sense of the fundamental theorems of welfare economics equilibrium allocations in these economies in particular it is shown that these allocations are nash efficient and under certain conditions any nash efficient allocation may be decentralized as an equilibrium with a system of lump sum transfers copyright 1989 by the london school of economics and political science

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

export restrictions and price insulation during commodity price booms for individual countries variable trade barriers can be used to reduce the volatility of domestic relative to world prices if this is done by countries accounting for a large share of the market its effect is offset by increases in world price volatility this study shows the nature of the resulting collective action problem with the policy being ineffective on average in stabilizing domestic prices while increasing the volatility of the income transfers from terms of trade changes a simple approach to assessing the contribution of insulation to the price increases is developed and used with new estimates of agricultural distortions to assess its contribution to the price spikes in 1972 74 and 2006 08 for rice and wheat the analysis suggests that 45 percent of the increase in rice prices in 2006 08 and 30 percent of the increase in wheat prices was due to insulating behavior one sign of progress since 1972 74 was a substantial reduction in the extent of price insulating behavior by the industrial countries this provides little stabilizing benefit in the rice market because countries not classifying themselves at the world trade organization as developing account for only 3 percent of world rice consumption but it does offer some benefit for the wheat market where non developing countries account for 27 percent of consumption

cost parametric analysis of lateral transshipment policies in two echelon supply chains abstract in this paper we examine the cost effects of two lateral intra echelon transshipment approaches in a two echelon supply chain network with a single supply source at the higher echelon and multiple retail locations at the lower through a series of simulation experiments under different operating conditions an important finding is that either of the proposed lateral shipment approaches is considerably superior to a policy of no such shipments albeit at the expense of increased transportation activity further an ad hoc emergency transshipment approach appears to be significantly more effective in terms of several important criteria as compared to a more systematic transshipment technique based on stock level equalization

dynamic pricing in the presence of inventory considerations research overview current practices and future directions the benefits of dynamic pricing methods have long been known in industries such as airlines hotels and electric utilities where the capacity is fixed in the short term and perishable in recent years there has been an increasing adoption of dynamic pricing policies in retail and other industries where the sellers have the ability to store inventory three factors contributed to this phenomenon 1 the increased availability of demand data 2 the ease of changing prices due to new technologies and 3 the availability of decision support tools for analyzing demand data and for dynamic pricing this paper constitutes a review of the literature and current practices in dynamic pricing given its applicability in most markets and its increasing adoption in practice our focus is on dynamic intertemporal pricing in the presence of inventory considerations

an inventory model with unidirectional lateral transshipments this paper deals with a continuous review inventory system with poisson demand in which lateral transshipments are allowed in case of a shortage at a location another location acts as a supplier if it is possible a common assumption in earlier papers is that transshipments are allowed between all locations this network configuration may however not be the best choice for many reasons one such reason is that it may be difficult to establish contracts between locations regarding the design of the transshipment policy another reason is that a system with many transshipment links is much more complex than a system with few transshipment links in this paper we study a system where transshipments are allowed only in one direction this may be a reasonable policy if the locations have very different backorder lost sales costs our approach is relatively simple and fast and works well in most cases

the impact of remittances on economic growth an econometric model abstract remittances in the world represent one of major international financial resources which sometimes they exceed the flows of foreign direct investment fdi for centuries there have been heated debates on the sources of economic growth in developing economies and also why some countries reflect strong economic growth comparing to others this study aims to observe the impacts of remittances on economic growth using panel data set of six high remittances receiving countries albania bulgaria macedonia moldova romania and bosnia herzegovina during the period 1999 2013 these countries have experienced a major increase in remittance inflows and at this time accounts for the bulk of total remittance receipts compared with other regions most countries remittances represent the largest source of foreign exchange earnings and represent more than 10 percent of gdp in other words the econometric analysis will be based on those six remittance receiving countries the paper is then to review the empirical literature devoted to the impact of remittances on economic growth in order to identify empirically if there are significant relationships between remittances and growth in these countries the results suggest that remittances have a positive impact on growth and that this impact increases at higher levels of remittances relative to gdp

dynamic pricing and ordering decisions by a monopolist this paper considers the relationship between pricing and ordering decisions for a monopolistic retailer facing a known demand function where over the inventory cycle the product may exhibit i physical decay or deterioration of inventory called wastage and ii decrease in market value called value drop associated with each unit of inventory on hand the retailer is allowed to continuously vary the selling price of the product over the cycle we introduce a notion of instantaneous margin and use it to derive profit maximizing conditions for the retailer the model explains the markdown of retail goods subject to decay it also provides guidance in determining when price changes during the cycle are worthwhile due to product aging how often such changes should be made and how such changes affect ordering intervals and quantities