optimal joint pricing and lot sizing with fixed and variable capacity this paper examines previously unexplored fixed and variable capacity problems of jointly determining an item s price and lot size for a profit maximizing firm facing constant but price dependent demands over a planning horizon we apply geometric programming to these constrained nonlinear maximization problems with nonconcave objective functions and obtain global optimal solutions using kuhn tucker condition marginal and sensitivity analyses we investigate model interactions provide managerial implications on the optimal capacity decisions and explore the postoptimal behavior of the price lot size and capacity expansion and reduction size some findings cast interesting insights different from previous just in time management studies without pricing consideration

understanding responses to supply chain disruptions insights from information processing and resource dependence perspectives why how and under what conditions do firms respond to supply chain disruptions these are important questions given that firms around the world are increasingly exposed to disruptions that impede their supply chain relationships and associated operations this study applies information processing and resource dependence perspectives to identify the repertoire of strategic responses to supply chain disruptions and to devise and test a model that explains the occurrence of the alternative responses the findings suggest that these responses are shaped by the stability motive and by interpretative postures which evolve from past experiences

cyclical and causal relations between real wages and employment in the eu this paper analyses and compares the joint behaviour of real wages and employment over the business cycle in the european union eu economies using both annual and quarterly data since 1960 further investigation of the cointegrating properties and the existence of causal effects in the real wage employment relation is undertaken by employing appropriate var models the evidence suggests weak procyclical or acyclic behaviour of real wages relative to cyclical employment in the quarterly data and stronger procyclicality in the annual data thus confirming the dunlop tarshis result for the majority of the eu economies with a few exceptions no cointegrating relations were detected while the granger causality tests suggest either weak or lack of unidirectional causality finally the sensitivity analysis showed that the filtering method has not much influence on the results but the choice of deflator may overturn them in certain cases

pricing in a customer market in standard pricing models movements in demand are partially offset by price responses in a customer market however price markups may decrease with high demand thus price may magnify rather than stabilize demand movements i consider a monopolist selling a good of which first time consumers are uncertain repeat customers know that the product works the monopolist trades the objectives of exploiting past customers and attracting new ones in a period with many new potential customers the monopolist gives more weight to attracting and lowers its markup last i examine some evidence on whether expansions are periods with disproportionately many new customers

managing advertising and promotion for long run profitability in recent years manufacturers have become increasingly disposed toward the use of sales promotions often at the cost of advertising yet the long term implications of these changes for brand profitability remain unclear in this paper we seek to offer insights into this important issue we consider the questions of i whether it is more desirable to ad vertise or promote ii whether it is better to use frequent shallow promotions or infrequent deep promotions and iii how changes in regular prices affect sales relative to increases in price promotions additional insights regarding brand equity the relative magnitude of short and long term effects and the decomposition of advertising and promotion elasticities across choice and quantity decisions are obtained to address these points we develop a heteroscedastic varying parameter joint probit choice and regression quantity model our approach allows consumers responses to short term marketing activities to change in response to changes in marketing actions over the long term we also accommodate the possibility of competitive reactions to policy changes of a brand the model is estimated for a consumer packaged good category by using over eight years of panel data the resulting parameters enable us to assess the effects of changes in advertising and promotion policies on sales and profits our results show that in the long term advertising has a positive effect on brand equity while promotions have a negative effect furthermore we find price promotion elasticities to be larger than regular price elasticities in the short term but smaller than regular price elasticities when long term effects are considered consistent with previous research we also find that most of the effect of a price cut is manifested in consumers brand choice decisions in the short term but when long term effects are again considered this result no longer holds last we estimate that the long term effects of promotions on sales are negative overall and about two fifths the magnitude of the positive short term effects finally making reasonable cost and margin assumptions we conduct simulations to assess the relative profit impact of long term changes in pricing advertising or promotion policies our results show regular price decreases to have a generally negative effect on the long term profits of brands advertising to be profitable for two of the brands and increases in price promotions to be uniformly unprofitable

factor demand models with nonlinear short run fluctuations abstract this paper considers asymmetric costs of adjustment that propagate nonlinear shortrun fluctuations in stochastic factor demand systems the model endogenously generates asymmetric cyclical demand for capital and labour between peaks and troughs of the business cycle the empirical analysis of the model is based on quarterly time series data of the dutch manufacturing sector for the period 1971 i 1984 iv and annual time series data of the u k manufacturing sector for the period 1955 1986 i find important differences of adjustment speed of capital and labour inputs between expansionary and contractionary phases of the business cycle

the timing and magnitude of retail store markdowns evidence from weekends and holidays we examine daily prices of eight goods at seventeen retail stores collected in ann arbor michigan over a four month period from november 1 to february 28 we focus on weekly and seasonal price patterns and on the frequency of price markdowns or sales there were frequent markdowns in the intensive shopping period prior to christmas and a tendency for such sales to occur on weekends we interpret these findings as evidence that a significant number of markdowns are timed to occur when shopping intensity is exogenously high we complement the imperfect information based motives for sales in the literature by contributing an additional element based on the role of bulk shopping and increasing returns in the shopping technology

integrating marketing and production planning in make to order companies abstract make to order companies are in the business of supplying products only in response to a customer s order they may supply unique products made to a customer s specification and or a limited range of products they range from the traditional job shop e g cutting pieces of metal to a specific shape to producers of machine tools e g a vulcanising line a major problem is the divide between sales marketing and production the production function is often faced with unrealistic delivery dates for incoming orders this arises when the sales force quote delivery dates and prices which will maximise the chance of the company winning the order the lack of coordination with production often leads to confirmed orders being delivered later than promised by sales and or being produced at a loss or alternatively production has to delay other orders with consequent extra costs the need to integrate sales and production planning considerations at the customer enquiry stage in deciding how to respond has been pointed out by several authors yet little research has been carried out the paper will discuss some possible approaches to the problem these essentially depend on estimating routinely the probability of winning an enquiry order dependent on many factors including price and lead time etc companies do not traditionally keep records of this data particularly records of unsuccessful bids and on competitors in addition the paper describes the experience of setting up a system to collect such data in a major uk company and the potential uses of such a database

a supply chain under limited time promotion the effect of customer sensitivity abstract we consider a two echelon supply chain with a supplier and a retailer facing stochastic customer demands the supplier is a leader who determines a wholesale price in response the retailer orders products and sets a price which affects customer demands the goal of both players is to maximize their profits we find the stackelberg equilibrium and show that it is unique not only when the supply chain is in a steady state but also when it is in a transient state induced by a supplier s promotion there is a maximum length to the promotion however beyond which the equilibrium ceases to exist moreover if customer sensitivity increases then the wholesale equilibrium price decreases product orders increase and product prices drop this effect well observed in real life does not however necessarily imply that the promotion is always beneficial conditions for the profitability of a limited time promotion are shown and analyzed numerically we discuss both open loop and feedback policies and derive the conditions necessary for them to remain optimal under stochastic demand fluctuations

managing channel profits a channel of distribution consists of different channel members each having his own decision variables however each channel member s decisions do affect the other channel members profits and as a consequence actions a lack of coordination of these decisions can lead to undesirable consequences for example in the simple manufacturer retailer consumer channel uncoordinated and independent channel members decisions over margins result in a higher price paid by the consumer than if those decisions were coordinated in addition the ensuing suboptimal volume leads to lower profits for both the manufacturer and the retailer this paper explores the problems inherent in channel coordination we address the following questions what is the effect of channel coordination what causes a lack of coordination in the channel how difficult is it to achieve channel coordination what mechanisms exist which can achieve channel coordination what are the strengths and weaknesses of these mechanism what is the role of nonprice variables e g manufacturer advertising retailer shelf space in coordination does the lack of coordination affect normative implications from in store experimentation can quantity discounts be a coordination mechanism are some marketing practices actually disguised quantity discounts we review the literature and present a simple formulation illustrating the roots of the coordination problem we then derive the form of the quantity discount schedule that results in optimum channel profits this article was originally published in marketing science volume 2 issue 3 pages 239 272 in 1983

privatization liberalization wages and employment theory and evidence for the uk most agency based privatization models are of the owner manager relation and ignore the labour market yet in the 1980s there were profound changes in public sector and privatized firms to wages and employment we develop a bargaining model of the manager workforce relation that explains employment and wages when firms are privatized government objectives become more commercial and markets are liberalised using data on 14 uk companies 1972 1988 that were publicly owned in 1972 we find a employment fell following the change to more commercial objectives b wages were only slightly affected by this but fell if the firm lost market power

resource allocation to defensive marketing and manufacturing strategies abstract in this paper we investigate the coordinated use of marketing and manufacturing strategies to formulate a defensive business strategy for an incumbent firm upon market entry while defensive marketing strategies have been researched extensively little has been done on defensive manufacturing strategies and even less on coordinating these two we propose a formulation for the joint formation of a defensive strategy by the marketing and production functions under budget constraint considerations the incumbent firm may allocate its resourcesto advertising and distribution expenditures as well as to manufacturing investments to reduce the unit production cost the incumbent firm has also the option of simply allocating all of its resources purely to advertising and distribution we show that while there exist cases where the optimal reaction to entry involves investments in manufacturing improvements there are also cases where defense is in marketing strategies alone we identify the market conditions that promote such reactions to entry and also provide sensitivity analysis

economic purchasing strategies for temporary price discounts abstract the familiar model for determining the optimal stock replenishment strategy for a temporary price reduction is based on the simple eoq this paper extends the logic to a composite eoq model which can be decomposed into a family of hybrid models with broader operational flexibility the composite eoq provides malleability and flexibility to changing operational requirements by disaggregating complexity it approaches the resourcefulness of an expert system with its attendant economies

optimal production purchasing and pricing a differential game approach abstract this paper deals with a problem of determining optimal production and pricing policies of a manufacturing firm which is supplying a retailer the latter faces a price dependent demand function towards the final consumers and wishes to determine optimal purchasing and pricing policies both firms carry inventories and backlogging is permitted the problem is modelled as a two player nonzero sum differential game with the inventory levels as the state variables the controls are the rates of production and purchasing as well as the prices assuming linear production costs but convex ordering and holding costs open loop nash controls are characterized by using switching point analysis as well as phase diagrams

on credible delegation by oligopolists a discussion of distribution channel management several papers in the recent marketing literature have suggested that delegation in distribution e g the use of independent middlemen helps manufacturers to precommit strategically to profit enhancing competitive actions further the literature suggests that the profitability of such actions depends on market structure we challenge these conclusions here this is done in two steps first we perform an analysis of the entire class of models which have been used in the literature using internally consistent assumptions about market structure and contracting the only subgame perfect equilibrium is one in which all distribution channels have infinitely many levels of delegation obviously this is not what we see in the real world next we relax a key hidden assumption namely that all intra channel agreements are observable to competitors without this assumption the usual results unravel unless channel members can offer credible guarantees that unobservable agreements do not exist the strategic effects of delegation disappear since these guarantees are virtually impossible to maintain credibly we would expect to reject the hypothesis in the earlier literature relating channel structure to competition in an empirical study controlling for observability we conclude that mechanisms other than strategic ones must be responsible for the existence of delegated channels and make some suggestions about promising avenues for future theory research in channel structure

the dynamic effect of discounting on sales empirical analysis and normative pricing implications baseline sales measure what retail sales would be in the absence of a promotion abraham and lodish 1993 and models that measure baseline sales are widely used by managers to assess the profitability of promotions bucklin and gupta 1999 this issue estimates of baseline sales and promotional response are typically independent of past promotional activity even though there is evidence to suggest that increased discounting reduces off promotion sales and increases the percentage of purchases made on deal e g krishna 1994 as a result models that do not consider dynamic promotional effects can mislead managers to overpromote given the widespread use of static models to evaluate the efficacy of promotions it is particularly desirable to calibrate a dynamic brand sales model and use it to establish an optimal course of action accordingly we develop a descriptive dynamic brand sales model and use it to determine normative price promotion strategies our descriptive approach consists of estimating a varying parameter sales response model letting model parameters vary with past discounting activity accommodates the possibility that market response changes with firms discounting policies in the normative model we use the estimates obtained in the descriptive model to determine optimal retailer and manufacturer prices over time the results of the descriptive model indicate that promotions have positive contemporaneous effects on sales accompanied by negative future effects on baseline sales the results of the normative model suggest that the higher share brands in our data tend to overpromote while the lower share brands do not promote frequently enough we project that the use of our model could improve manufacturers profits by as much as 7 to 31 more generally the normative results indicate that i if deals become more effective in the current period i e if consumers are more price sensitive promotions should be used more frequently and ii as the negative dynamic effect of discounts on sales increases the optimal level of discounting should go down without our approach it would be difficult to make this trade off exact finally we demonstrate that these dynamic effects provide another perspective to the marketing literature regarding the existence of promotions

differential game models in management science abstract this paper reviews a number of differential games applications to management science and operations research problems published with a few exceptions during the last decade the purpose of the article is to provide the reader with an up to date account of the state of the art within this field after having stated in an introduction the general differential games framework as well as some conceptual problems we proceed to review the models which have been divided into the following functional areas investment consumption and employment production inventories and maintenance marketing advertising pricing and rd bargaining natural resources and pollution the survey concludes with some remarks on applicability solvability and directions for future research

strategic decentralization in channels the purpose of this paper is to understand the effect of strategic interaction on a manufacturer s channel structure decision in the model i analyze if there were no strategic interaction then the manufacturer would prefer vertical integration to decentralization with strategic interaction however decentralization can be a nash equilibrium strategy as mcguire and staein mcguire timothy richard staelin 1983a an industry equilibrium analysis of downstream vertical integration marketing sci 2spring 161 192 showed so the question arises what is it about strategic interaction that makes decentralization a nash equilibrium strategy the answer i give is that strategic interaction makes it possible for a manufacturer s retail demand curve to rise when he decentralizes i show that this raising of the demand curve on decentralization can happen only if one of the following mutually exclusive conditions is satisfied 1 the manufacturers products are demand substitutes at the retail level and strategic complements at the manufacturer or retailer levels 2 the manufacturer s products are demand complements at the retail level and strategic substitutes at the manufacturer or retailer levels strategic complementarity at the retailer manufacturer level means that if one retailer manufacturer raises his price then the other retailer manufacturer would raise his price as well strategic substitutability is just the opposite these results show that what is important for decentralization to occur is not how demand substitutable the two manufacturers products are as one might have thought from earlier works in the literature but rather the nature of coupling between demand dependence and strategic dependence

economic resilience of the firm a production theory approach abstract as a result of catastrophic events firms and other organizations are faced with input shortages and price shocks firms can respond to these events using a variety of resilience actions or tactics here we provide a microeconomic foundation for analyzing a comprehensive range of these tactics incorporating both inherent and adaptive concepts of resilience we classify these tactics and derive optimality conditions for production with the use of each class of resilience in the context of a nested constant elasticity of substitution ces function consisting of aggregated capital k labor l infrastructure i and materials m the framework has broad applicability including measurement and scoring of resilience cost effectiveness assessment of resilience tactics individually and as a group calculation of resilience indices and supply chain management

measuring the efficacy of inventory with a dynamic input output model abstract this paper extends the recently developed dynamic inoperability input output model diim for assessing productivity degradations due to disasters inventory policies are formulated and incorporated within the diim to evaluate the impact of inventories on the resilience of disrupted interdependent systems the inventory diim can provide practical insights to preparedness decision making through explicit tradeoff analysis of multiple objectives including inventory costs and economic loss reductions the model is demonstrated in several illustrative examples to depict various nuances of inventory policies the paper then culminates in a case study that utilizes input output and inventory accounts from the bureau of economic analysis

marketing production decisions in an industrial channel of distribution this paper presents a model that considers the interface between marketing and production decisions in a channel of distribution of industrial goods comprised of a manufacturer and a distributor the key issue investigated is the nature of the coordination within the channel in light of an unstable pattern of seasonal demand the investigation which focuses on dynamic issues considers production activities such as product delivery and inventory policy and their link to marketing strategies such as pricing policies the focus here is on the dynamic nature of the coordinational aspects of the various policies for example the following questions are addressed what is the distributor s pricing strategy throughout the season what is the nature of the contractual price in the channel under what conditions should the distributor carry no inventory throughout the seasonal period under what conditions should the manufacturer carry no inventory what is the impact of the seasonal parameters and differing h

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

regular flexibility of nested ces functions in this paper we define the class of regular flexible functional forms as the class of cost functions which are globally well behaved and can provide a local approximation to any globally well behaved cost function we then offer a constructive proof of flexibility for the nonseparable n stage constant elasticity of substitution functional form nnces by describing a technique through which the nnces form can be parameterized so as to locally capture any regular configuration of input demands and second order curvature conditions

the real wage employment relationship in the united states this article examines the real wage employment relationship in the united states in the light of the diversity of results in the literature it demonstrates that when the relationship is correctly specified in the sense that due allowance is made for technical progress and capital accumulation and the appropriate value added deflator is used for the wage then a negative relationship may be observed in the data an incorrect specification however is as likely to lead to a positive relationship as a negative one

prices promotions and channel profitability was the conventional wisdom mistaken abstract because of the lack of empirical evidence supporting the shift of economic power from manufacturers to retailers it has been claimed that the conventional wisdom that retailers benefit more from the use of consumer promotions was mistaken this paper assesses this claim and examines how two different pricing approaches during manufacturers instant price promotions targeted at consumers impact on channel profits in a bilateral monopoly we found that manufacturers should only offer rebates when they keep their prior to promotion wholesale prices unchanged consistent with the conventional wisdom retailers do indeed take the lion s share of the promotion incremental profits surprisingly however we found that in the largest part of the parameter space manufacturers still earn more total channel profits than retailers over time the theoretical and managerial implications of these findings are discussed

interactions between members of a marketing production channel under seasonal demand abstract key decisions in a marketing production channel faced with a seasonal demand include production and pricing decisions for the manufacturer and processing and pricing decisions for the retailer in such situations a variety of contracts are possible including contracts under which the manufacturer charges a constant price throughout the season or the retailer processes at a constant rate throughout the season also possible are channel structures in which the manufacturer and retailer cooperate to make decisions jointly the main objective of the present paper is to compare optimal policies under all the situations described above we show that having a constant manufacturer s price or a constant processing rate does not have a significant impact upon the retailer s price or inventory decisions however if the demand is not highly seasonal a constant processing rate contract will result in higher production and processing rates and a lower manufacturer s price compared to a constant manufacturer s price contract also a centralized channel involving joint decision making will lead to a lower price at the retail level and higher production and processing rates hence issues such as channel coordination and contracts between manufacturers and retailers which have received significant attention in the marketing literature have implications for the production area as well

an industry equilibrium analysis of downstream vertical integration this paper investigates the effect of product substitutability on nash equilibrium distribution structures in a duopoly where each manufacturer distributes its goods through a single exclusive retailer which may be either a franchised outlet or a factory store static linear demand and cost functions are assumed and a number of rules about players expectations of competitors behavior are examined it is found that for most specifications product substitutability does influence the equilibrium distribution structure for low degrees of substitutability each manufacturer will distribute its product through a company store for more highly competitive goods manufacturers will be more likely to use a decentralized distribution system this article was originally published in marketing science volume 2 issue 2 pages 161 191 in 1983

competitive strategies for two firms with asymmetric production cost structures we model joint production marketing strategies for two firms with asymmetric production cost structures in competition the first firm called the production smoother faces a convex production cost and a linear inventory holding cost the second firm called the order taker faces a linear production cost and holds no inventory each firm is assumed to vary continuously over time both its production rate and its price in view of an unstable surge pattern of demand the underlying theoretical motivation is to investigate the temporal nature of the equilibrium policies of two competing firms one operating at or near capacity the production smoother and one operating significantly below capacity the order taker we characterize and compare the equilibrium strategies of the two competing firms among our results we show that if the duopolistic production smoother finds it optimal to hold inventory then he will begin the season by building up inventory continue by drawing down inventory until i

employment composition and the cyclical behaviour of the aggregate real wage this article investigates the relation between the cyclical behaviour of employment composition and the weighted average aggregate real wage in the usa cyclicality of employment composition arises in the context of two competing explanations of business cycle theory the human capital investment and profitability models consistent with the implications of the profitability theory the relative share of labour hours for older age 25 more highly skilled and paid workers declines faster during recessions compared to younger age 16 19 and 20 24 less skilled and lower paid workers this result coupled with the downward flexibility of teenage real wages reinforces the procyclical reduction in the aggregate real wage during recessions interestingly the decline in the relative share of workers age 25 during recessions is not accompanied by a corresponding significant decline in their nominal or real wages thus most of the adjustment during cyclical downturns appears to result in a reduction

optimal pricing and production in an inventory model abstract this paper deals with the problem of simultaneously determining the optimal price policy and production rate over a given planning horizon for nonlinear demand functions and convex inventory and shortage cost functions the optimal solution paths are derived by using optimal control theory the treatment of linear nonsmooth cost functions requires the use of a generalized maximum principle the solution method is a phase portrait analysis providing insight into the optimal pricing and production policies as well as the resulting inventory paths moreover it is shown that in the case of nonsmooth piecewise linear cost functions the equilibrium is approached within finite time although the model is nonlinear in the control variables finally it is illustrated that exogenous fluctuations in the demand rate seasonal demand pattern amount to cyclical optimal solutions

optimal pricing strategies for new products in dynamic oligopolies this paper deals with the determination of optimal pricing policies for firms in oligopolistic markets the problem is studied as a differential game and optimal pricing policies are established as nash open loop controls cost learning effects are assumed such that unit costs are decreasing with cumulative output discounting of future profits is also taken into consideration initially the problem is addressed in a general framework and we proceed to study some specific cases that are related to models presented in recent literature three basic classes of sales dynamics are analyzed competition with price effects only competition with price as well as adoption effects and competition with adoption effects only in some cases it turns out that results which hold for the monopoly case carry over to the multi firm case in the sense that the qualitative structure of optimal pricing strategies is the same in the monopoly and the oligopoly cases however due to competitive interdependencies differences certainly exist in the levels as well as the rates of change of optimal prices

a note on competitive supply chains with generalised supply costs abstract this note generalises models from two influential papers in the theory of supply chain outsourcing under competition mcguire and staelin 1983 cachon and harker 2002 the first paper studies the impact of competitive intensity on the outsourcing decision from the supplier s point of view for linear supply cost the second paper examines the impact of supply economies of scale from the retailer s point of view when selling perfectly substitutable products by considering competitive intensity and supply economies of scale simultaneously we find that equilibrium channel structures are primarily determined by the competitive intensity which is true even under supply diseconomies of scale the key message in the second paper of scale economies driving retailer s outsourcing supply decision is highly dependent on the assumption of perfect substitutes our finding has no qualitative difference when either the suppliers or the retailers are modeled as the channel leader and make the outsourcing decisions

the employment real wage relationship an international study the neoclassical and keynesian theories of employment both predict an inverse relationship between employment and real wages in the short run the observed correlation between employment and real wages however has usually failed to conform to this prediction dunlop 1938 and tarshis 1939 reported a positive correlation between real and money wages which given procyclical movement of money wages was interpreted as evidence against the theoretical prediction the statistical significance of these results was however challenged by ruggles 1940 and tobin 1948 more recent studies by kuh 1966 and bodkin 1969 failed to detect a significant relationship between real wages and employment these findings stimulated a series of contributions by solow and stiglitz 1968 barro and grossman 1971 1976 and others developing alternative models not apparently refuted by the evidence barro and grossman recast macro theory under the assumption that markets did not clear modigliani 1977 argued that the observed relationship between employment and real wages could be accounted for in an oligopolistic model of firm behavior thus both the competitive and equilibrium assumptions of the classical model were diagnosed as the sources of its apparent empirical refutation

a differential game theoretic model for duopolistic competition on design quality in this paper we propose a differential game theoretic model to analyze the design quality and pricing decisions for a product over the product life cycle the market is represented as a duopoly where our product competes against a similar product marketed by our competition the duopolistic competition is modeled as a two player nonzero sum noncooperative game the resulting control theoretic model is solved under certain functional assumptions to describe the nash equilibrium strategies of the two competitors finally observations made on an extensive set of numerical experimentations over a variety of model parameters are summarized into a set of relevant managerial guidelines on developing design quality and pricing strategies

a differential game model of the marketing operations interface in the development of their dynamic strategies the marketing and operations functions within a firm have differing objectives and conflict between the two functions is common the strategic interdependence involving marketing and operations decisions is modeled as a noncooperative differential game demand is assumed to be a function of price and advertising goodwill and marketing controls price and advertising to maximize its discounted stream of revenue net of advertising costs backlogging is allowed and operations controls production to minimize its discounted stream of production and backlog costs a feedback nash equilibrium is derived for the game which allows a solution of the system of differential equations for goodwill and backlog and is analyzed to study the nature of the dynamic strategies for price advertising and production

production inventory and pricing under cost and demand learning effects abstract the paper considers a monopolist firm that plans its production inventory and pricing policy over a fixed and finite horizon the problem is represented by an optimal control model which combines elements from three streams of literature the first of these is a classical or area and deals with optimal production and inventory under exogenously given demand conditions the second is an area of marketing science which studies dynamic pricing under demand learning effects demand learning refers to the situation where current demand for a product is influenced by past demand the third area belongs to microeconomics and industrial organization and is concerned with the effects of learning by doing in a firm s production process learning is reflected in a unit production cost that decreases with cumulative production using a path synthezising procedure we obtain closed form characterizations of optimal production pricing and inventory policies

process flexibility in supply chains process flexibility whereby a production facility can produce multiple products is a critical design consideration in multiproduct supply chains facing uncertain demand the challenge is to determine a cost effective flexibility configuration that is able to meet the demand with high likelihood in this paper we present a framework for analyzing the benefits from flexibility in multistage supply chains we find two phenomena stage spanning bottlenecks and floating bottlenecks neither of which are present in single stage supply chains which reduce the effectiveness of a flexibility configuration we develop a flexibility measureg and show that increasing this measure results in greater protection from these supply chain inefficiencies we also identify flexibility guidelines that perform very well for multistage supply chains these guidelines employ and adapt the single stage chaining strategy of jordan and graves 1995 to multistage supply chains

competition under industry stock driven prevailing market price environmental consequences and the effect of uncertainty abstract we address competition between several firms that cause pollution when producing fully substitutable products these firms comprise the industry and each individual firm charges for its products the market price determined by the difference between cumulative market supply and demand i e by the industry s stock we find that although the greater the number of firms competing for the same primary market the lower the market price and the higher the industry inventory surplus the reduction in price at market equilibrium is insufficient to stimulate greater aggregate sales that is greater competition does not necessarily induce higher industry output and pollution furthermore we show that commitment production pollution strategies compared to contingent strategies do not necessarily result in lower pollution especially when the number of competing firms is not high market uncertainty is low and proportional pollution taxation is high

marketing production coordination in channels of distribution abstract in this paper we analyze the effects of functional horizontal decentralization by a channel member on the performance of an industrial channel of distribution we use the model of eliashberg j steinberg r 1987 management science 33 981 1000 which describes a channel of distribution consisting of a manufacturer and a value adding distributor we allow the distributor to decentralize decision making between his marketing and production functions our results show that functional decentralization at the distributor level increases the price sensitivity of the distributor concerning the price he faces from the manufacturer causes a shift in the distributor s demand curve increases the distributor s inventory activities in terms of both quantity and time frame and under certain conditions increases the manufacturer s inventory as expected the decentralized distributor has a less coordinated pricing policy vis a vis the production policy using numerical means we show that functional decentralization can improve the overall channel profitability i e for both manufacturer and distributor this counter intuitive result suggests that in our non repeated perfect information game setting functional decentralization can yield a pareto dominant equilibrium outcome where both the distributor and manufacturer are better off even though it is only the distributor who is changing his organizational decision making

quality improvement vs advertising support which strategy works better for a manufacturer abstract we consider a marketing channel with a single manufacturer and a single retailer where both advertising and quality improvement contribute to the build up of goodwill in a non coop scenario the retailer controls the advertising efforts while the manufacturer controls the quality improvements and wholesale price although improving quality positively contributes to goodwill it also increases the production cost thereby reducing the manufacturer s profit in a coop scenario the manufacturer supports the retailer s advertising while decreasing his investments in quality we investigate the conditions under which a coop program is beneficial when such a trade off occurs our results demonstrate that only when advertising significantly contributes to goodwill the manufacturer has an incentive to cooperate and a coop program turns out to be pareto improving conversely the retailer is always better off with a coop program moreover the channel is operational and marketing driven when quality effectiveness is high independent of advertising effectiveness or when both quality and advertising effectiveness are large in all other cases the channel is marketing driven

price versus production postponement capacity and competition this article presents a comparative analysis of possible postponement strategies in a two stage decision model where firms make three decisions capacity investment production inventory quantity and price typically investments are made while the demand curve is uncertain the strategies differ in the timing of the operational decisions relative to the realization of uncertainty we show how competition uncertainty and the timing of operational decisions influence the strategic investment decision of the firm and its value in contrast to production postponement price postponement makes the investment and production inventory decisions relatively insensitive to uncertainty this suggests that managers can make optimal capacity decisions by deterministic reasoning if they have some price flexibility under price postponement additional postponement of production has relatively small incremental value therefore it may be worthwhile to consider flexible ex post pricing before production postponement reengineering while more postponement increases firm value it is counterintuitive that this also makes the optimal capacity decision more sensitive to uncertainty we highlight the different impact of more timely information which leads to higher investment and inventories and of reduced demand uncertainty which decreases investment and inventories our analysis suggests appropriateness conditions for simple make to stock and make to order strategies we also present technical sufficiency and uniqueness conditions under price postponement these results extend to oligopolistic and perfect competition for which pure equilibria are derived interestingly the relative value of operational postponement techniques seems to increase as the industry becomes more competitive

testing whether unemployment represents intertemporal labour supply behaviour in the lucas rapping 1969 model of the labour market fluctuations in unemployment represent individuals optimally adjusting their labour supply behaviour in response to fluctuations in wage rates over the business cycle in this paper i propose and implement a misspecification test of the lucas rapping treatment of unemployment as labour supply behaviour using panel data this test extends previous such work with micro data by simultaneously allowing for intertemporal substitution uncertainty and endogenous unemployment using the standard specification of intertemporal labour supply behaviour i find strong evidence against this interpretation of unemployment there are two possible interpretations of the test results the first is that it is necessary to turn to alternative models of the labour market in which unemployed workers are off a supply function the second is that the test results indicate the necessity of moving to more complex models of intertemporal substitution however given current econometric techniques and data sets these alternative models of intertemporal substitution will be extremely difficult to test

the impact of dynamic pricing on the economic order decision this paper analyzes the impact of dynamic pricing on the single product economic order decision of a monopolist retailer items are procured from an external supplier according to the economic order quantity eoq model and are sold to customers on a single market without competition following the simple monopolist pricing problem coordinated decision making of optimal pricing and ordering is influenced by operating costs including ordering and inventory holding costs and the demand rate obtained from a price response function the retailer is allowed to vary the selling price either in a fixed number of discrete points in time or continuously while constant and continuous pricing have received much attention in the literature problems with a limited number of price changes are rather rare this paper illustrates the benefit of dynamically changing prices to achieve operational efficiency in the eoq model that is to trigger high demand rates when inventories are high we provide structural properties of the optimal time instants when the price should be changed taking into account costs for changes in price it provides numerical guidance on number timing and size of price changes during an order cycle numerical examples show that the benefits of dynamic pricing in an eoq framework can be achieved with only a few price changes and that products being unprofitable under static pricing may become profitable under dynamic pricing

simultaneous and dynamic price production inventory and capacity decisions abstract this paper concerns a profit maximizing firm that derives the optimal price for its output level of output level of inventory and composition of productive capacity over time first it is assumed that capacity may be acquired to either increase or replace the firm s existing productive capacity second it is assumed that the acquisition of new capacity causes a reduction in the firm s production cost lastly it is assumed that demand which is expressed as a function of time and price must be met either from current production or from inventory clearly the level of production cannot exceed the productive capacity at any time the optimal control model formulated requires the solution of a two point boundary value problem so that a discrete approximation numerical procedure is presented numerical results indicate that due to anticipated technological improvement the acquisition of new capacity is postponed and occurs in greater magnitude later in the planning horizon in addition as a result of upgrading productive capacity through the acquisition of new technology numerical results show that a firm lowers its per unit production cost and thereby reduces the optimal price charged for output which increases demand furthermore since the level of capacity is increased due to the purchase of new technology less reliance on inventory is necessary to meet peak demand lastly it is shown that a larger firm optimally acquires a greater level of new capacity over the planning horizon to reduce its operating costs and thereby further its competitive advantage

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

in search of a stylised fact do real wages exhibit a consistent pattern of cyclical variability the paper surveys the studies on the cyclical behaviour of real wages published from the twenties onwards the traditional simple neoclassical model of the labour market suggests that real wages tend to move countercyclically however from a theoretical viewpoint there are few reasons to expect this behaviour once the simple model is extended to account for imperfect competition uncertainty lagged responses or contracting between firms and workers empirical studies give different answers to the problem the contributions reviewed in the paper are arranged roughly in a chronological order the interwar period the postwar pre econometric studies the econometric work using aggregate data the evidence produced on the basis of longitudinal data the analyses of the shock responsiveness of real wages and finally the most recent papers attempting a reconciliation of the somewhat conflicting evidence derived from aggregate and panel data

competition and cooperation in marketing channel choice theory and application this paper discusses the problem of choosing a vertical marketing channel in a product differentiated duopolistic market firms choose product price and the form of the marketing channel to maximize profits it is shown that integration of the marketing function results in greater price competition and lower prices than does the use of independent marketing middlemen the profitability of reducing price competition by using such middlemen is investigated two hypotheses that integration is negatively associated with the products substitutability and that symmetric channel structures are stable are tested in a preliminary way and supported with survey data from the international semiconductor industry

game theoretic pricing and ordering decisions with partial lost sales in two stage supply chains abstract few papers have studied the optimal pricing and ordering with partial lost sales from a two stage game theoretic perspective this paper considers a supply chain game with a buyer and a seller through pricing and ordering models with partial lost sales we evaluate the optimal solutions for the buyer and the seller and provide insights into both the deterministic and stochastic demand models we also propose search algorithms to obtain the global optimum when convexity and concavity conditions are not satisfied

a stochastic production planning model with a dynamic chance constraint abstract this paper deals with the optimal production planning for a single product over a finite horizon the holding and production costs are assumed quadratic as in holt modigliani muth and simon hmms 7 model the cumulative demand is compound poisson and a chance constraint is included to guarantee that the inventory level is positive with a probability of at least at each time point the resulting stochastic optimization problem is transformed into a deterministic optimal control problem with control variable and of the optimal solution is presented the form of state variable inequality constraints a discussion the optimal control production rate is obtained as follows if there exists a time t 1 such that t 1 o t where t is the end of the planning period then i produce nothing until t 1 and ii produce at a rate equal to the expected demand plus a correction factor between t 1 and t if t 1 is found to be greater than t then the optimal decision is to produce nothing and always meet the demand from the inventory