single period multiproduct inventory models with substitution we study a single period multiproduct inventory problem with substitution and proportional costs and revenues we consider n products and n demand classes with full downward substitution i e excess demand for class i can be satisfied using product j for i j we first discuss a two stage profit maximization formulation for the multiproduct substitution problem we show that a greedy allocation policy is optimal we use this to write the expected profits and its first partials explicitly this in turn enables us to prove additional properties of the profit function and several interesting properties of the optimal solution in a limited computational study using two products we illustrate the benefits of solving for the optimal quantities when substitution is considered at the ordering stage over similar computations without considering substitution while ordering specifically we show that the benefits are higher with high demand variability low substitution cost low profit margins or low price to cost ratio high salvage values and similarity of products in terms of prices and costs

unemployment with observable aggregate shocks a general equilibrium model of optimal employment contracts is developed where firms have better information about labor s marginal product than workers it is optimal for the wage to be tied to the level of employment to prevent the firm from falsely stating that the marginal product is low and cutting the wage it is shown that an observed aggregate shock that leads to an interindustry shift in labor demand and that would have no effect on total employment under symmetric information leads to a reduction in employment when firms and workers have asymmetric information

capacitated two stage multi item production inventory model with joint setup costs we analyze a continuous time two stage production inventory system in the first stage a common intermediate product is produced in batches and possibly stored in the second phase the intermediate product is fabricated into n distinct finished products several finished products may be included in a single production batch of limited capacity to exploit economies of scale we propose a planning methodology to address the combined problem of joint setup costs and capacity limits per setup we restrict ourselves to a class of replenishment strategies with the following properties a replenishment strategy specifies a collection of families subsets of items covering all end items if an item belongs to several families a specific fraction of its sales is assigned to each family each time the inventory of one item in a family is replenished the inventories of all other items in the family are replenished as well we derive a simple roughly 0n log n algorithm that results in a strategy whose long run average cost comes within a few percentage points of a lower bound for the minimum achievable cost within the above class of strategies

inventory pooling under heavy tailed demand risk pooling has been studied extensively in the operations management literature as the basic driver behind strategies such as transshipment manufacturing flexibility component commonality and drop shipping this paper explores the benefit of risk pooling in the context of inventory management using the canonical model first studied in eppen eppen gd 1979 effects of centralization on expected costs in a multi location newsboy problem management sci 25 5 498 501 specifically we consider a single period multilocation newsvendor model where n different locations face independent and identically distributed demands and linear holding and backorder costs we show that eppen s celebrated result i e that the expected cost savings from centralized inventory management scale with the square root of the number of locations depends critically on the light tailed nature of the demand uncertainty in particular we establish that the benefit from pooling relative to the decentralized case in term

evaluation of stock allocation policies in a divergent inventory system with shipment consolidation in this paper we consider a one warehouse n retailer inventory system characterized by access to real time point of sale data and a time based dispatching and shipment consolidation policy at the warehouse more precisely inventory is reviewed continuously while a consolidated shipment for example a truck to all retailers is dispatched from the warehouse at regular time intervals the focus is on investigating the cost benefits of using state dependent myopic allocation policies instead of a simple fcfs first come first serve rule to allocate shipped goods to the retailers the analysis aims to shed some light on when if ever fcfs is a reasonable policy to use in this type of system the fcfs allocations of items to retailers are determined by the sequence in which retailer orders or equivalently customer demands arrive to the warehouse applying the myopic policy enables the warehouse to postpone the allocation decision to the moment of shipment from the warehouse or the moments of delivery to the different retailers and to base it on the inventory information available at those times the myopic allocation method we study is often used in the literature on periodic review systems

exact and approximate cost functions for product aggregates we show that certain large multiproduct problems can be well approximated by smaller models of the same form representing only one aggregate product or a few such products this reduction follows from a new technique to approximate the minimal cost of a special allocation or disaggregation problem by a simple closed form aggregate cost function this function moreover has the same form as the cost functions for the original individual products for special cases the approximation is exact this latter result is related to economic theoretic research on aggregation with homothetic preferences the results are applied to a one stage multiperiod multi item production smoothing model and then to a similar model of a two stage system yielding a reduction in the number of items to one or to relatively few

a study of the impact of sectoral shifts on aggregate unemployment in canada the recent trend in macro economic literature has been to explain cycles in aggregate output and employment in terms of unexpected nominal shocks only in these models the natural rate of unemployment is constant this paper diverges from this approach and following a recent paper by david lilien 1982 considers the impact of real as well as nominal variables the main findings are 1 a significant part of the fluctuations in the canadian unemployment over the 1957 83 period was caused by real shocks to the economy and 2 most of the transmission of the business cycle from the united states to canada is effected through real variables as well une etude de limpact de deplacements sectoriels sur le niveau de ch6mage agrege au canada dans la litterature macroeconomique recente on a eu tendance a expliquer les cycles dans le niveau de la production et de l emploi a peu pres strictement en termes de chocs nominaux non anticipes dans ces modeles le taux de ch6mage naturel est constant ce memoire prend des distances par rapport a cette approche et suit pluto t la direction suggeree par un memoire recent de david lilien qui considere l impact des variables reelles tout autant que celui des variables nominales les resultats principaux sont 1 une portion significative des fluctuations dans le niveau du chomage canadien entre 1957 et 1983 a et causee par des chocs reels subis par l economie 2 le gros de h1 transmission du cycle economique des etats unis vers le canada se fait par le truchement des variables reelles

making it underground comparative material on the informal sector in western market economies this paper examines the informal economy and its relationship to commonly held theories of industrial development although these theories stem from very different intellectual traditions their general assumption has been that widespread informal economic activities are primarily a feature of third world economies in which they function as a refuge from destitution such activities are presumably destined to desappear with the advance of modern industry led growth evidence is presented that indicates that these assumptions including the identification of informality with conditions in the less developed countries are wrong alternative interpretations of the resilience of these activities in third world countries despite rapid industrialization and their continuity and apparent revival in the advanced economies and discussed

capacitated multi item inventory systems with random and seasonally fluctuating demands implications for postponement strategies we address multi item inventory systems with random and seasonally fluctuating and possibly correlated demands the items are produced in two stages each with its own lead time in the first stage a common intermediate product is manufactured the production volumes in the first stage are bounded by given capacity limits we develop an accurate lower bound and close to optimal heuristic strategies of simple structure the gap between them evaluated in an extensive numerical study is on average only 0 45 we use the model to investigate the benefits of various delayed product differentiation postponement strategies as well as other strategic questions including i the benefits of flexible versus dedicated production facilities ii the trade off between capacity and inventory investments and iii the trade off between capacity investments and service levels

94 effective policies for a two stage serial inventory system with stochastic demand a two stage inventory system is considered where poisson demand occurs at stage 1 and stage 1 replenishes its inventory from stage 2 which in turn orders from an outside supplier with unlimited stock each shipment either to stage 2 or to stage 1 incurs a fixed setup cost under the assumption that the supply leadtime at stage 2 is zero we characterize a simple heuristic policy whose long run average cost is guaranteed to be within 6 of optimality i e a 94 effective policy the paper also provides heuristic policies for more general inventory systems and reports computational results

sectoral shifts unemployment and vacancies an empirical analysis for the netherlands abstract in this paper the correlation between sectoral dispersion of employment growth and unemployment is analyzed empirical results for the netherlands indicate that fluctuations in unemployment are due to aggregate demand factors with no substantial influence of shifts in sectoral demand

sectoral shifts and cyclical unemployment a substantial fraction of cyclical unemployment is better characterized as fluctuations of the frictional or natural rate than as deviations from some relatively stable natural rate shifts of employment demand between sectors of the economy necessitate continuous labor reallocation since it takes time for workers to find new jobs some unemployment is unavoidable this paper presents evidence that most of the unemployment fluctuations of the seventies unlike those in the sixties were induced by unusual structural shifts within the u s economy simple time series models of layoffs and unemployment are constructed that include a measure of structural shifts within the labor market these models are estimated and a derived natural rate series is constructed

lower bounds for multi echelon stochastic inventory systems we establish lower bounds on the minimum cost of managing certain production distribution networks with setup costs at all stages and stochastic demands these networks include serial assembly and one warehouse multi retailer systems we obtain the bounds through novel cost allocation schemes we evaluate the bounds performance for one warehouse multi retailer systems by comparing them with simple heuristic policies the bounds are quite tight for systems with a small number of retailers we also present simplified proof of known optimality results for serial and assembly systems

optimal control of a divergent multi echelon inventory system consider a divergent multi echelon inventory system such as a distribution system or a production system at every facility in the system orders are placed or production is initiated periodically the order arrives after a fixed lead time at the end of each period linear costs are incurred penalty costs are incurred at the most downstream facilities for back orders the objective is to minimize the expected holding and penalty costs per period we prove that under the balance assumption it is cost optimal to control every facility by an order up to policy the optimal replenishment policy i e the order up to level and the allocation functions at each facility can be determined by system decomposition this decomposition reduces complex multi dimensional control problems to simple one dimensional problems

design for postponement a comprehensive characterization of its benefits under unknown demand distributions recent papers have developed analytical models to explain and quantify the benefits of delayed differentiation and quick response programs these models assume that while demands in each period are random they are independent across time and their distribution is perfectly known i e sales forecasts do not need to be updated as time progresses in this paper we characterize these benefits in more general settings where parameters of the demand distributions fail to be known with accuracy or where consecutive demands are correlated here it is necessary to revise estimates of the parameters of the demand distributions on the basis of observed demand data we analyze these systems in a bayesian framework assuming that our initial information about the parameters of the demand distributions is characterized via prior distributions we also characterize the structure of close to optimal ordering rules in these systems for a variety of types of order cost functions

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

optimal policy for a muti product multi period non stationary stochastic production and customization problem abstract this paper is concerned with a multi product multi period non stationary stochastic production and customization problem in which a firm wishes to satisfy multi period stochastic demands for m products the firm produces a generic product that can be customized into the m products the lead time to produce the generic product is one period the generic product can be customized into any of the m products immediately assume that the costs of production customization storage and shortage are linear also assume that the unsatisfied demands for the m products at the firm in each period are lost the objective of the firm is to find a production customization policy that minimizes the expected cost over a planning horizon we obtain the conditions that ensure that a myopic production customization policy is optimal

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

an integrated supply chain problem with environmental considerations in this paper a novel formulation for a multiple product capacitated inventory location supply chain model with risk pooling and carbon emission considerations is proposed various products are shipped from a single plant to retailers with stochastic demand via a network of capacitated warehouses in the presence of environmental regulations the locations and inventory policies of the warehouses are chosen so as to minimize the sum of fixed facility location transportation inventory carrying costs and emissions related costs the warehouses retain safety stock so as to maintain appropriate service levels in the face of uncertain demand at the retailers for multiple products computational results are also presented

the strategic perils of delayed differentiation the value of delayed differentiation also known as postponement for a monopolist has been extensively studied in the operations literature we analyze the case of imperfectly competitive markets with demand uncertainty wherein the choice of supply chain configuration i e early or delayed differentiation is endogenous to the competing firms we characterize firms choices in equilibrium and analyze the effects of these choices on quantities sold profits consumer surplus and welfare we demonstrate that purely strategic considerations not previously identified in the literature play a pivotal role in determining the value of delayed differentiation in the face of either entry threats or competition these strategic effects can significantly diminish the value of delayed differentiation in fact under plausible conditions these effects dominate the traditional risk pooling benefits associated with delayed differentiation in which case early differentiation is the dominant strategy for firms even under cost parity with delayed differentiation we extend the main model to study the effects of alternate market structures asymmetric markets and inventory holdback our results in particular that for a broad range of parameter values early differentiation is a dominant strategy even under cost parity with delayed differentiation are robust to these relaxations

coordinated replenishments in a multi item inventory system with compound poisson demands in many practical applications or multi item inventory systems significant economies of scale can be exploited when coordinating replenishment orders for groups of items this paper considers a continuous review multi item inventory system with compound poisson demand processes excess demands are backlogged and each replenishment requires a lead time there is a major setup cost associated with any replenishment of the family of items and a minor item dependent setup cost when including a particular item in this replenishment moreover there are holding and penalty costs we present an algorithm which searches for a simple coordinated control rule minimizing the long run average cost per unit time subject to a service level constraint per item on the fraction of demand satisfied directly from on hand inventory this algorithm is based on a heuristic decomposition procedure and a specialized policy iteration method to solve the single item subproblems generated by the decomposition procedure the model applies to multi location inventory systems with similar cost structures for coordinated deliveries

coordinated replenishment strategies in inventory distribution systems in this paper we study the impact of coordinated replenishment and shipment in inventory distribution systems we analyze a system with multiple retailers and one outside supplier random demand occurs at each retailer and the supplier replenishes all the retailers in traditional inventory models each retailer orders directly from the supplier whenever the need arises we present a new centralized ordering policy that orders for all retailers simultaneously the new policy is equivalent to the introduction of a warehouse with no inventory that is in charge of the ordering allocation and distribution of inventory to the retailers under such a policy orders for some retailers may be postponed or expedited so that they can be batched with other retailers orders which results in savings in ordering and shipping costs in addition to the policy we propose for supplying inventory to the retailers we also consider three other policies that are based on these well known policies in the literature a can order policy b echelon inventory policy and c fixed replenishment interval policy furthermore we create a framework for simultaneously making inventory and transportation decisions by incorporating the transportation costs or limited truck capacities we numerically compare the performance of our proposed policy with these policies to identify the settings in which each policy would perform well

a model for analyzing multi channel distribution systems to capture customers in different market segments many firms distribute their products using multiple channels involving in store mail order and electronic mediums nevertheless the business literature is replete with examples where the management of multiple distribution channels becomes unwieldy as a way to evaluate different distribution strategies arising from multiple channels we develop a model of a general multi channel distribution system subject to stochastic demand since the exact analysis of our model is intractable we propose a decomposition scheme that enables us to develop a near optimal distribution policy with minimum total expected distribution cost we utilize our analysis of this multi channel system in two specific applications arising from multi channel distribution the first application deals with a store based retailer expanding into a direct sales channel the retailer can fill the orders generated from this additional sales channel by using the existing stores or the existing depots for this application we evaluate the trade off between these two options the second application intends to find a cost effective way to distribute products by utilizing the combined distribution system of two retailers after a potential merger and acquisition m a for this application we quantify the benefit of an m a in terms of distribution efficiency

a two echelon allocation model and the value of information under correlated forecasts and demands abstract in this article we explore the effects of incorporating forecasts explicitly in a two echelon allocation model which consists of a central depot and several retailers in particular we investigate the possible benefits on the system costs and inventory levels the depot does not hold any inventory and the demand is observed only at the retailers under a general correlated demand forecast structure we obtain the approximate system wide order up to level and the expected system cost in order to assess the value of information provided by keeping track of the forecasts we construct a comparable inventory system operating under a standard demand model we demonstrate that the standard demand model results in higher order up to levels and higher system costs

determining near optimal base stock levels in two stage general inventory systems abstract this paper proposes an easily implementable scalable decomposition heuristic for determining near optimal base stocks in two level general inventory systems in this heuristic the general system is decomposed into assembly systems one for each end product for these assembly systems the base stock levels are calculated separately taking into account risk pooling effects for the common components our numerical analyses yield two main insights first the base stock levels determined by the heuristic are close to optimal second considerable improvements can be obtained compared to common sense heuristics

optimal centralized ordering policies in multi echelon inventory systems with correlated demands this paper treats a depot warehouse system in which demand occurs at the warehouse or retail level this work differs from a number of other studies in that we allow item demands to be correlated both across warehouses and also correlated in time our motivation for this generalization arises from our experience with an actual system of this type used by a major national producer and distributor of consumer products we observed both high correlations between successive monthly demands around 0 7 and correlations between demands for an item at different locations also about 0 7 in a given time period we derive an explicit expression for the optimal safety stock as a function of the level of correlation through time the analysis requires two assumptions 1 the allocation assumption and 2 the equal coefficient of variation assumption similar assumptions have been used by other researchers finally numerical evaluations are included to illustrate the impact of the various magnitudes of correlation

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

sectoral shifts and canadian unemployment in this paper lilien s 1982 hypothesis that sectoral shifts in employment raise aggregate unemployment is tested using canadian quarterly data lilien s framework is extended to investigate regional labour market rigidities and to distinguish between industry shifts that are correlated with changes in aggregate activity and those which are exogenous to the overall level of activity the robustness of the results to various changes in model specification is also investigated i find that in canada exogenous shifts in employment between sectors do not have a significant effect on the aggregate unemployment rate this abstract was borrowed from another version of this item

sectoral shifts employment specialization and the efficiency of matching an analysis using uk regional data robson m 2006 sectoral shifts employment specialization and the efficiency of matching an analysis using uk regional data regional studies 40 743 754 over the past 30 years the industry composition of unemployment in the uk has been subject to considerable structural change the degree of which has varied significantly across regions this paper uses lilien s index of sectoral shifts to document the incidence of structural change across regions and in addition follows the work of wren and taylor 1999 by computing measures of the degree of specialization in regional employment it then uses these data to examine the effect of sectoral shifts and employment specialization on the efficiency of the process with which unemployed workers are matched to available job vacancies in regional labour markets robson m 2006 l evolution sectorielle la specialisation de l emploi et l adequation du travail une analyse de donnees regionales du royaume uni regional studies 40 743 754 pendant les trente

balancing retailer inventories this paper examines the optimality of inventory balancing in a one warehouse n retailer distribution system facing stochastic demand for a single product over t successive time intervals in particular we consider the division of predetermined quantities of warehouse stock among retailers in each interval balancing attempts to bring the retailer inventories to the same normalized with respect to first interval demand net inventory level when the demand distribution over the t periods is symmetric with respect to all pairs of retailers and retailer cost over the t intervals is a convex function of the t shipments we show that balancing divisions are optimal the required convexity condition is shown to be satisfied for some familiar cost functions when shortages are backordered and lost however for other cost functions the convexity condition is satisfied under backordering but not under lost sales we also consider the nonidentical retailer demands are not symmetric case and provide examples