a deterministic inventory model for deteriorating items with stock dependent demand rate abstract a deterministic inventory model is developed by assuming that the demand rate is stock dependent and the items deteriorate at a constant rate the expression for the average net profit over one production run is derived and its optimization with respect to the decision variables q initial stock and t duration of a production cycle is carried out this leads to two highly nonlinear equations which are solved by using a subroutine neqnf in imsl math library in cyber 180 480a computer system the optimal solution so derived is compared with that for the no deterioration 0 case sensitivity of the optimal solution to changes in parameter values is examined several aspects of the functional form for the demand rate are considered in a separate section finally the salient features of the problem and its solution are discussed in brief

supplier relations and the market context a theory of handshakes abstract this paper analyzes the degree of formality in industrial procurement contracts impose cost discipline on suppliers but stifle cooperative innovation noncontractual procurement provides cooperation but poor cost discipline however cost discipline comes naturally when there is not much vertical integration because the promise of finding an alternative buyer to use as a bargaining threat enhances the supplier s incentive to make efficiency enhancing investments thus highly integrated industries use contracts while less integrated industries do business on handshakes in the latter cooperative innovations flourish this may help explain some international comparisons and changes in business practices observed over time

optimal ordering and pricing policies in a single period environment with multivariate demand and markdowns this paper investigates a single period inventory model in which the demand of the product is a deterministic multivariate function of price time and level of inventory models are formulated for the basic pricing case and the case with a price markdown during the season solution methodologies are presented for each case when the pricing decisions are predetermined and when they are decision variables comments on the practical use of this model are presented and sensitivity analysis is conducted on the decision variables and demand parameters

optimal dynamic pricing for deteriorating items with reference price effects when inventories stimulate demand abstract in this paper we incorporate reference price effects into a deteriorating inventory problem when the demand rate depends on displayed stock level and selling price simultaneously reference price effects are formed empirically by customers to adjust current price perception on the basis of past purchases the market demand is assumed to be responsive to the difference between the current selling price and the reference price which is perceived as a loss or a gain we consider three scenarios of market demand loss neutrality loss aversion and loss seeking an optimal dynamic pricing model is established to determine a pricing strategy maximizing the discounted total profit over an infinite time horizon theoretical results are derived to demonstrate the existence of the optimal solutions and to explore the relationships between optimal pricing decisions and an initial reference price based on mild assumptions numerical example and sensitivity analysis are presented to illustrate the theoretical results and managerial insights finally concluding remarks are offered

a note on eoq models for deteriorating items under stock dependent selling rate abstract in 1995 padmanabhan and vrat presented inventory models for deteriorating items with stock dependent selling rate and derived the profit functions without backlogging and with complete backlogging first this paper develops the necessary and sufficient conditions of the existence and uniqueness of the optimal solutions of the profit per unit time functions without backlogging and with complete backlogging second this paper explains that it is appropriate to use the newton raphson method to find the optimal solutions of the profit functions per unit time in both situations modelled

an eoq model with stock dependent demand shortage inflation and time discounting abstract this paper develops a finite time horizon deterministic economic order quantity eoq inventory model with shortages where the demand rate at any instant depends on the on hand inventory stock level at that instant the effects of inflation and the time value of money are taken into account considering two separate inflation rates namely the internal company inflation rate and the external general economy inflation rate the results are discussed with a numerical example and particular case of the model is discussed in brief a sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out

how much demand should be fulfilled we study the inventory replenishment of a product whose demand can be manipulated by restricting the supply this research is motivated by a novel marketing tactic employed by manufacturers of fashion and luxury items such a tactic combines innovative marketing with deliberate understocking in an attempt to create shortages i e waitlists that add to the allure and sense of exclusivity of a product and stimulate its demand we model the problem as a finite horizon periodic review system where demand in each period is a decreasing function of the net ending inventory in the previous period although the optimal structure can be complex in general under certain conditions we are able to characterize the optimal policy as a state dependent monotone base stock policy we compare this policy with the optimal policy for the case in which demand is independent of the net inventory we also show that understocking is optimal in various scenarios we then propose a novel strategy called the inventory withholding strategy to further explore the wait list effect by making customers wait even when there is inventory on hand to satisfy them our numerical experiments study the impact of various model parameters in combination with the wait list effect on the optimal policy and the corresponding expected profits

an order level lot size inventory model with inventory level dependent demand and deterioration abstract many inventory models have been developed for various deteriorating items with constant demand rate it is a common experience that for perishable consumer goods the age of inventory has a negative impact on the demand due to the loss of consumer confidence on such product consumers tend to keep off perishable items which have reached closer to their expiry dates this paper describes an inventory model in which the demand is considered as a composite function consisting of a constant component and a variable component which is proportional to the inventory level in the periods when there is a positive inventory buildup the rate of production is considered finite and the decay rate as exponential the total cost function is composed of four cost components of all phases of the cycle backorder replenishment inventory buildup inventory depletion and shortage this cost function is later reduced to a two variable function using boundary relations to determine iteratively the set of values of the variables that resulted in minimum cost per cycle the optimum lot size and order level were then obtained with relations established previously results are demonstrated for an instance of the model

some results for inventory models having inventory level dependent demand rate abstract this paper considers the inventory level dependent demand rate situation in generalized eoq models an interesting result linking the total inventory cost and the optimal policy for such a frame work is obtained and is shown to be consistent for all the models discussed in the paper

hiring churn and the business cycle hires occur for two reasons to grow a business and to replace those who have left churn churn is an important part of employment dynamics allowing workers to move to their most productive use we present evidence on churn from the job openings and labor turnover survey jolts churn is procyclical during the 2007 09 recession four fifths of hiring reductions are associated with reduced churn not with reductions in job creation we estimate that the cost of reduced churn is about two fifths of a percentage point of gdp annually throughout the three and one half year period since the beginning of the recession

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

where has all the skewness gone the decline in high growth young firms in the u s abstract the pace of business dynamism and entrepreneurship in the u s has declined over recent decades we show that the character of that decline changed around 2000 since 2000 the decline in dynamism and entrepreneurship has been accompanied by a decline in high growth young firms prior research has shown that the sustained contribution of business startups to job creation stems from a relatively small fraction of high growth young firms the presence of these high growth young firms contributes to a highly positively skewed firm growth rate distribution in 1999 a firm at the 90th percentile of the employment growth rate distribution grew about 31 percent faster than the median firm moreover the 90 50 differential was 16 percent larger than the 50 10 differential reflecting the positive skewness of the employment growth rate distribution we show that the shape of the firm employment growth distribution changes substantially in the post 2000 period by 2007 the 90 50 differential was only 4 percent larger than the 50 10 and it continued to exhibit a trend decline through 2011 the overall decline reflects a sharp drop in the 90th percentile of the growth rate distribution accounted for by the declining share of young firms and the declining propensity for young firms to be high growth firms

a network approach to modeling the multi echelon spare part inventory system with backorders and interval valued demand a multi echelon inventory system implies the existence of a hierarchy of stocking locations and the dependence and interaction between them we consider a multi echelon spare part inventory management problem with outsourcing and backordering the problem is characterized by deterministic repair time cost and supply and demand that lie within prescribed intervals and that vary over time the objective is to minimize the total inventory and transportation costs we develop a network model for problem analysis and present a network flow algorithm for solving the problem we prove that the wagner whitin property known for the lot sizing problem can be extended to the spare part inventory management problem under study

managing innovation optimal incentive contracts for delegated r d with double moral hazard abstract managing innovation involves double moral hazard because the principal delegates r d to a specialized agent and then makes decisions to apply the resulting invention double moral hazard is significant because innovation by the principal implies that the optimal incentive contract satisfies monotonicity conditions the analysis shows that the optimal incentive contract for delegated r d is an option delegated r d with simultaneous sampling results in shirking but delegated r d with sequential sampling attains the efficient outcome the analysis considers a combined problem with simultaneous and sequential search and gives sufficient conditions under which delegated r d attains the first best the discussion also considers delegated r d with stochastic innovation and with stochastic quality of inventions

dynamic and stochastic behavior of coefficient of demand uncertainty incorporated with eoq variables an application in finished goods inventory from general motors dealerships abstract the objective of this paper is to investigate finished goods inventory in the u s automobile industry using an econometric method known as the variable mean response vmr estimation the research uses the classical economic order quantity eoq model as a starting point different from the usual form of the model here we relax certain assumptions inherent to the eoq and treat demand as uncertain rather than deterministic in this research eight models are developed and applied empirically the results of the proposed models and methodology provide inventory decision makers with different managerial implications and strategic improvements overall the empirical results demonstrate many avenues for considering new inventory policies

note the newsvendor model with endogenous demand this paper considers a firm s price and inventory policy when it faces uncertain demand that depends on both price and inventory level the authors extend the classic newsvendor model by assuming that expected utility maximizing consumers choose between visiting the firm and consuming an exogenous outside option the outside option represents the utility the consumer forgoes when she chooses to visit the firm before knowing whether or not the product will be available the authors investigate both the case in which the firm s price is exogenous and the case in which price is chosen optimally the paper makes two contributions first the authors show that the firm holds more inventories provides a higher fill rate attracts more customers and earns higher profits when it internalizes the effect of its inventory on demand second the authors show that in the endogenous price case the firm s two dimensional decision problem can be reduced to two sequential single variable optimizations as a result the endogenous price case is as easy to solve as the exogenous price case

inventory management under market size dynamics we investigate the situation where a customer experiencing an inventory stockout at a retailer potentially leaves the firm s market in classical inventory theory a unit stockout penalty cost has been used as a surrogate to mimic the economic effect of such a departure in this study we explicitly represent this aspect of consumer behavior incorporating the diminishing effect of the consumers leaving the market upon the stochastic demand distribution in a time dynamic context the initial model considers a single firm we allow for consumer forgiveness where customers may flow back to the committed purchasing market from a nonpurchasing latent market the per period decisions include a marketing mix to attract latent and new consumers to the committed market and the setting of inventory levels we establish conditions under which the firm optimally operates a base stock inventory policy the subsequent two models consider a duopoly where the potential market for a firm is now the committed market of

an inventory model for deteriorating items with stock dependent demand rate abstract this paper discusses an inventory model with an inventory level dependent demand rate followed by a constant demand rate for items deteriorating at a constant rate where the terminal condition of zero inventory at the end of the scheduling period has been relaxed sensitivity of the decision variables to changes in the parameter values is examined and the effects of these changes on the optimal policy are discussed in brief

getting handcuffs on an octopus theoretical work on minimum wage policy emphasizes labor market dynamics but the resulting implications for worker mobility remain largely untested the authors show that in the teenage labor market higher minimum wage standards reduce worker flows and increase job stability furthermore they find that the employment effects of a relatively higher minimum wage vary considerably across markets with different levels of turnover and labor market tightness results help to explain the small effects of minimum wage standards on employment commonly found in the aggregate data and are consistent with labor market models that involve search frictions

sh a r p shelf allocation for retailers profit shelf space is the retailer s scarcest resource space management tools are thus badly needed for that purpose commercial computer packages and optimal allocation models have been developed building on the work of corstjens and doyle we elaborate a general theoretical shelf space allocation model which focuses on the demand interdependencies prevailing across and within product groups rules of thumb are compared to the derived optimal allocation the sh a r p model is introduced as a simplified yet realistic variant and validated against data collected in a dutch supermarket chain subsequently the feasibility of its implementation has been experimented in various belgian chains case studies demonstrate the profit potential of sh a r p

statistical learning of service dependent demand in a multiperiod newsvendor setting we study an inventory system wherein a customer may leave the seller s market after experiencing an inventory stockout traditionally researchers and practitioners assume a single penalty cost to model this customer behavior of stockout aversion recently a stream of researchers explicitly model this customer behavior and support the traditional penalty cost approach we enrich this literature by studying the statistical learning of service dependent demand we build and solve four models a baseline model where the seller can observe the demand distribution a second model where the seller cannot observe the demand distribution but statistically learns the demand distribution a third model where the seller can learn or pay to obtain the exact information of the demand distribution and a fourth model where demand in excess of available inventory is lost and unobserved interestingly we find that all four models support the traditional penalty cost approach this result confirms the use of a state independent stockout penalty cost in the presence of demand learning more strikingly the first three models imply the same stockout penalty cost which is larger than the stockout penalty cost implied by the last model

the rational effect of price promotions on sales and consumption we explore the rational effect of price variation on sales and consumption in markets where consumers are uncertain about the future price of goods we first derive an optimal ordering policy which expresses the amount a consumer should purchase and consume in a given period as a function of the observed price of the good the distribution of future prices and the nature of his or her inventory this policy extends previous normative models of inventory control such as those by golabi 1985 and kalymon 1970 to the case where the amount to consume in a given period is an explicit decision variable and prices follow a first order stochastic process we then use this model to explore how changes in the long run frequency and temporal correlations of price promotions should normatively affect the contemporaneous relationship between purchase consumption and price among the predictions which follow from the model are that consumption should rationally increase with the size of existing inventories the short term sensitivity of sales to prices should be greater than that of consumption to price and this discrepancy increases with decreases in the temporal correlation of price deals and the long term relative frequency of price deals

what happens to the employers involved in mass layoffs we apply the empirical framework of the displaced worker literature to the study of outcomes for displacing employers long term patterns of employment average wages and closure probabilities before and after mass layoffs vary by the reason for layoffs the industry of employers employer age and the period in which the layoff took place employers with mass layoffs during the great recession and the recovery that has followed have milder patterns of employment levels and closure probabilities than employers with layoffs in previous periods these differences are not fully explained by changes in the observable characteristics of employers and layoffs

multi objective models for lot sizing with supplier selection abstract in this paper two multi objective mixed integer non linear models are developed for multi period lot sizing problems involving multiple products and multiple suppliers each model is constructed on the basis of three objective functions cost quality and service level and a set of constraints the total costs consist of purchasing ordering holding and backordering and transportation costs ordering cost is seen as an ordering frequency dependent function whereas total quality and service level are seen as time dependent functions the first model represents this problem in situations where shortage is not allowed while in the second model all the demand during the stock out period is backordered considering the complexity of these models on the one hand and the ability of genetic algorithms to obtain a set of pareto optimal solutions we apply a genetic algorithm in an innovative approach to solve the models comparison results indicate that in a backordering situation buyers are better able to optimize their objectives compared to situations where there is no shortage if we take ordering frequency into account the total costs are reduced significantly

the extent and cyclicality of career changes evidence for the u k using quarterly data for the u k from 1993 through 2012 we document that the extent of worker reallocation across occupations or industries a career change in the parlance of this paper is high and procyclical this holds true after controlling for workers previous labour market status and for changes in the composition of who gets hired over the business cycle our evidence suggests that a large part of this reallocation reflect excess churning in the labour market we also find that the majority of career changes come with wage increases during the economic expansion wage increases were typically larger for those who change careers than for those who do not during the recession this is not true for career changers who were hired from unemployment our evidence suggests that understanding career changes over the business cycle is important for explaining labour market flows and the cyclicality of wage growth

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

incentives in university technology transfers there are two main ways in which the knowledge created in universities has been transferred to firms licensing agreements and the creation of spin offs in this paper we describe the main steps in the transfer of university innovations the main incentive issues that appear in this process and the contractual solutions proposed to address them

heterogeneity and unemployment dynamics many previous articles have studied the contribution of inflows and outflows to the cyclical variation in unemployment but ignored the critical role of unobserved heterogeneity across workers thi

the role of inventory in delivery time competition the paper operationalizes the notion of shortage cost by considering the behavior of customers and competing firms and examines the role of inventory in response time competition we start with a single firm production control model in which customers are characterized by their preferences of price quality and delivery time the optimal production inventory policy and the optimal choice between make to order and make to stock operations are determined in simple newsboy like formulas the basic model is then extended to an n firm market game in which firms compete for orders from the aspect of early delivery one could think of this setting as an oligopoly racing market the analysis shows that competition can breed a demand for produce to stock just as other economic phenomena such as economies of scale uncertainty or seasonality can induce make to stock and that delivery time competition increases the buyer s welfare while decreasing the producer s welfare

the dynamics of technological innovation the case of the pharmaceutical industry abstract this paper examines the mechanisms and dynamics of the process of innovation in companies and sectors of the chemical industry it is based on analysis of science and technology output indicators namely patents and innovations evaluated in terms of originality and in the case of innovations in terms of market success as well radical innovation ri is identified as the kingpin for the evolution of technologies in both the micro and macro economic context not only because it provides a model for imitation but also because it turns out to be more profitable for the innovating companies than incremental innovation at the micro economic level this paper examines the significance of diverse driving forces which lead a company to the launching of projects aiming at ri measures the length of commitment to such projects and describes the dynamic effects generated by the introduction of a successful ri and how they affect the company s subsequent r d and market orientation at the macro economic level this paper identifies the stages of youth growth maturity and decline of the subsectors of the chemical industry examines the distribution of ri and market successful innovations over the development of a sector describes the influence of market demand and capital investment on technological advance and compares the development of national chemical industries the paper concludes with an account of the dynamics of technological innovation in the chemical industry over the period 1930 1985 which is based on the empirical findings of the previous sections

a model for optimizing retail space allocations the allocation of scarce shelf space among competing products is a central problem in retailing space allocation affects store profitability through both the demand function where both main and cross space elasticities have to be considered and through the cost function procurement carrying and out of stock costs a model is developed which uniquely incorporates both effects a case study is used to estimate the parameters and the problem is solved within a geometrical programming framework an extensive comparison with alternative procedures suggests this general model leads to significantly different allocation rules and superior profit performance

inventory decisions for substitutable products with stock dependent demand abstract we study a retailer s inventory policy for two products the products are substitutable and have inventory dependent demand so a higher inventory level of a product increases its sales we model the joint effect of demand stimulation and product substitution on inventory decisions by considering a single period stochastic demand setting we provide the first order optimality conditions for the profit maximizing order quantities and interpret them using marginal analysis we also consider two heuristic solutions that separately account for either demand stimulation or product substitution our numerical analysis reveals that the optimal policy by appropriately using sales information that quantifies substitution and demand stimulation can produce significantly higher profits the profit benefits are lessened under certain circumstances such as when the two products have similar critical fractile values suggesting that in such instances the heuristics may be used effectively

asymmetric consumer learning and inventory competition we develop a model of consumer learning and choice behavior in response to uncertain service in the marketplace learning could be asymmetric that is consumers may associate different weights with positive and negative experiences under this consumer model we characterize the steady state distribution of demand for retailers given that each retailer holds a constant in stock service level we then consider a noncooperative game in steady state between two retailers competing on the basis of their service levels the demand distributions of retailers in this game are modeled using a multiplicative aggregate market share model in which the mean demands are obtained from the steady state results for individual purchases but the model is simplified in other respects for tractability our model yields a unique pure strategy nash equilibrium we show that asymmetry in consumer learning has a significant impact on the optimal service levels market shares and profits of the retailers when retailers have different costs it also determines the extent of competitive advantage enjoyed by the lower cost retailer

a general equilibrium model for industries with price and service competition this paper develops a stochastic general equilibrium inventory model for an oligopoly in which all inventory constraint parameters are endogenously determined we propose several systems of demand processes whose distributions are functions of all retailers prices and all retailers service levels we proceed with the investigation of the equilibrium behavior of infinite horizon models for industries facing this type of generalized competition under demand uncertainty we systematically consider the following three competition scenarios 1 price competition only here we assume that the firms service levels are exogenously chosen but characterize how the price and inventory strategy equilibrium vary with the chosen service levels 2 simultaneous price and service level competition here each of the firms simultaneously chooses a service level and a combined price and inventory strategy 3 two stage competition the firms make their competitive choices sequentially in a first stage all firms simultaneously choose a service level in a second stage the firms simultaneously choose a combined pricing and inventory strategy with full knowledge of the service levels selected by all competitors we show that in all of the above settings a nash equilibrium of infinite horizon stationary strategies exists and that it is of a simple structure provided a nash equilibrium exists in a so called reduced game we pay particular attention to the question of whether a firm can choose its service level on the basis of its own input characteristics i e its cost parameters and demand function only we also investigate under which of the demand models a firm under simultaneous competition responds to a change in the exogenously specified characteristics of the various competitors by either i adjusting its service level and price in the same direction thereby compensating for price increases decreases by offering improved inferior service or ii adjusting them in opposite directions thereby simultaneously offering better or worse prices and service

america s jobs challenges and the continuing role of the u s department of labor the article looks at economic and labor market problems and policies designed to address them in the u s as of 2014 it discusses the role of the u s department of labor dol in addressing what the author describes as the most significant economic challenges the country faces the need for faster economic growth to create more jobs overall long term unemployment among experienced workers labor market inequality and the need of dislocated and disadvantaged workers for training and job search help topics include unemployment insurance ui the dol s employment and training administration and effective program evaluation in the dol

the role of entrepreneurship in us job creation and economic dynamism the united states has long been viewed as having among the world s most entrepreneurial dynamic and flexible economies it is often argued that this dynamism and flexibility has enabled the us economy to adapt to changing economic circumstances and recover from recessions in a robust manner while the evidence provides broad support for this view the outcomes of entrepreneurship are more heterogeneous than commonly appreciated and appear to be evolving in ways that could raise concern evidence along a number of dimensions and a variety of sources points to a us economy that is becoming less dynamic of particular interest are declining business startup rates and the resulting diminished role for dynamic young businesses in the economy we begin by describing how the concept of entrepreneurship is reflected in existing data on firm age and size the recent addition of firm age to official statistics represents a dramatic improvement in the information available to entrepreneurship researchers we then turn to a discussion of the role of startup firms in job creation business startups account for about 20 percent of us gross total job creation while high growth businesses which are disproportionately young

optimal inventory policies under service sensitive demand the service level provided by a retailer influences demand and sales in several ways in the short run sales can fall short of demand when customers experience stockouts and choose not to backorder in the long run demand itself may decline as customers who experience excessive stockouts shift permanently to more reliable sources the traditional approach to determining inventory policies assumes a fixed stockout cost attributable to each stockout occasion in practice stockout costs are difficult to determine at least in part because they reflect the long term loss of demand due to inadequate service in this paper we model the response of long run demand to the service level of the retailer and determine optimal order up to inventory policies in the presence of service sensitive demand we show under what conditions inventory policy is sensitive to both the mean and the variance of long run demand

eoq models for perishable items under stock dependent selling rate this paper presents inventory models for perishable items with stock dependent selling rate the selling rate is assumed to be a function of current inventory level and rate of deterioration is taken to be constant under instantaneous replenishment with zero lead time the model incorporates aspects such as complete partial and no backlogging eoq is determined for maximizing the total profit in each of the situations the models developed are illustrated through numerical examples and sensitivity analysis is reported

managing global sourcing inventory performance the use of global suppliers has increased considerably over the last three decades operations management theory establishes that global sourcing requires more units of inventory but since these units are often procured at a lower cost from global suppliers the capital invested in inventory and the consequent financial burden may increase or decrease with global sourcing this study provides rigorous firm level empirical evidence that links the global sourcing practices of public u s firms and their inventory investments we process bill of lading manifests customs forms to extract information on over half a million sea shipments from global suppliers to u s public firms and link this information with quarterly financial data from the compustat database we provide stylized facts on the participation of different firms and sectors in global trade using a simultaneous equation model we find that an increase in global sourcing results in an increase in inventory investment a 10 shift in sourcing from domestic to global suppliers increases the inventory investment by 8 8 for an average firm in our sample we also find that increasing the number of suppliers can mitigate this increase in inventory investment for example going from single to dual sourcing reduces inventory investment by about 11 we illustrate the use of our estimates to identify the impact of changing global sourcing strategy on inventory investment and operational performance metrics this paper was accepted by martin lariviere operations management

inventory models with the demand rate dependent on stock and shortage levels this paper investigates an inventory system in which the demand rate during stockout periods differs from that during the in stock period by a given amount the previous analysis conducted in this area formulated the model as a cost minimization model this type of formulation will intentionally try to decrease demand by increasing the stockout period in order to decrease costs this paper appropriately considers the model as a profit maximization model and develops a closed form solution the model is then further generalized to incorporate the effect of stock level dependent demand rates and considers initial stock dependent demand as well as instantaneous stock dependent demand rates

welfare reducing licensing abstract in this paper we characterize situations where licensing a cost reducing innovation to a rival firm using two part tariff contracts a fixed fee plus a linear per unit of output royalty reduces social welfare we show that it occurs if i the firms compete in prices ii the innovation is large enough but not drastic and iii the goods are close enough substitutes moreover we show that regardless of the type of competition first the optimal contract always includes a positive royalty and second even drastic innovations are licensed whenever the goods are not homogeneous

an eoq model with state dependent demand rate we present an eoq type model in which the demand rate is a function of the inventory level the demand functions and holding cost functions considered are quite general in particular we focus on two types of demand rate functions a piecewise constant function and a family of exponential functions the paper includes analysis of the problem optimization and sensitivity analysis we also extend the model by adding randomness to the order sizes

analysis of an inventory system under backorder correlated deterministic demand and geometric supply process abstract in this article we propose a single item periodic review model that investigates the effects of changes in the demand process that occur after stockout realizations we investigate a system where the demands in successive periods are deterministic but affected by the backorder realizations in order to capture the effects of changes in the demand process we use a geometric type supply availability we analytically derive the necessary components for obtaining profit related performance measures and provide computational analysis

stack them high let em fly lot sizing policies when inventories stimulate demand in some retail contexts stocking large quantities of inventory may not only improve service levels but can also stimulate demand for products having demand rates that increase with inventory levels we analyze the effect of stocking decisions on firm profitability to develop managerial insights regarding the structure of the optimal inventory policy and to understand how this policy differs from traditional approaches when inventories stimulate demand iteratively applying the standard economic order quantity eoq model by setting the demand rate parameter equal to the observed average demand rate in prior cycles yields an equilibrium order quantity that is robust to demand parameter misestimation but is suboptimal the profit maximizing policy orders larger quantities and can replenish inventory even before on hand stock fully depletes using an extension of a standard inventory dependent demand model from the literature we first provide a convenient characterization of products that require early replenishment we demonstrate that the optimal cycle time is largely governed by the conventional trade off between ordering and holding costs whereas the reorder point relates to a promotions oriented cost benefit perspective we show that the optimal policy yields significantly higher profits than cost based inventory policies underscoring the importance of profit driven inventory management

backorder penalty cost coefficient b what could it be abstract the classical economic order quantity eoq model with planned penalized backorders pb relies on postulating a value for the backorder penalty cost coefficient b which is supposed to reflect the intangible adverse effect of the future loss of customer goodwill following a stockout recognizing that the effect of the future loss of customer goodwill should be not a direct penalty cost but a change in future demand schwartz 1966 a new approach to stockout penalties management science 12 12 b538 b544 modified the classical eoq pb model by eliminating the backorder penalty cost term from the objective function and assuming that the long run demand rate is a decreasing strictly convex function of the customer s disappointment factor defined as the complement of the demand fill rate following a stockout which in turn is an increasing strictly convex function of the demand fill rate he called the new model a perturbed demand pd model schwartz provided convincing justification for his pd model and presented several variations of it in a follow up paper but he did not solve any of these models in this paper we solve schwartz s original pd model and its variations and we discuss the implications of their solutions thus filling a gap in the literature left by schwartz moreover having been convinced that schwartz s approach is more valid than the classical approach for representing the effect of the loss of customer goodwill following a stockout but also recognizing that the classical approach is far more popular than the pd approach because of its simplicity and because of tradition we use the solution of the pd model to infer the value of b in the classical model thus providing one possible answer to the question what could b be a noteworthy implication of the solution of schwartz s original pd model is that the optimal fill rate is always 0 or 1 rendering the inferred value of b in the classical model 0 or respectively suspecting that the property of the pd function which is most likely responsible for producing this bang bang type of result is strict convexity we show that for the case where the pd function is proportional to an integer power say n of the fill rate the optimal fill rate is always 0 or 1 if and only if n 1 in which case the pd function is strictly convex in the fill rate

eoq models with general demand and holding cost functions abstract we consider the continuous deterministic infinite horizon single item inventory system within the setting of a retail sector in which the demand rate for an item is dependent on the existing inventory level the traditional parameter of the replenishment cost is kept constant but the carrying cost per unit is allowed to vary two possibilities of variation are considered a a non linear function of the length of time the item is held in inventory and b a non linear function of the amount of on hand inventory we find the optimal policies and decision rules and show that the classical eoq model is obtained as a limiting case

stocking and pricing decisions under endogenous demand and reference point effects abstract in this paper we study the newsvendor s pricing and stocking decisions under reference point effects the demand faced by the newsvendor is endogenous and the customers may also decide to procure the product from an outside option we characterize the firm s optimal pricing and stocking decisions our analysis reveals a threshold policy on the firm s ordering and pricing decisions while considering the impact of reference point effects we also find that as the level of optimism increases the firm s optimal ordering level decreases and optimal price increases we further study the impact of loss aversion on the firm s ordering and pricing decisions

optimal shelf space stocking policy using stochastic dominance under supply driven demand uncertainty abstract in this paper we develop an optimal shelf space stocking policy when demand in addition to the exogenous uncertainty is influenced by the amount of inventory displayed supply on the shelves our model exploits stochastic dominance condition and we assume that the distribution of realized demand with higher stocking level stochastically dominates the distribution of realized demand with lower stocking level we show that the critical fractile with endogenous demand may not exceed the critical fractile of the classical newsvendor model our computational results validate the optimality of amount of units stocked on the retail shelves

dynamic pricing and inventory management under inventory dependent demand we analyze a finite horizon periodic review joint pricing and inventory management model for a firm that replenishes and sells a product under the scarcity effect of inventory the demand distribution in each period depends negatively on the sales price and customer accessible inventory level at the beginning of the period the firm can withhold or dispose of its on hand inventory to deal with the scarcity effect we show that a customer accessible inventory dependent order up to dispose down to display up to list price policy is optimal moreover the optimal order up to display up to and list price levels are decreasing in the customer accessible inventory level when the scarcity effect of inventory is sufficiently strong the firm should display no positive inventory and deliberately make every customer wait the analysis of two important special cases wherein the firm cannot withhold or dispose of inventory delivers sharper insights showing that the inventory dependent demand drives both optimal prices and order up to levels down in addition we demonstrate that an increase in the operational flexibility e g a higher salvage value or the inventory withholding opportunity mitigates the demand loss caused by high excess inventory and increases the optimal order up to levels and sales prices we also generalize our model by incorporating responsive inventory reallocation after demand realizes finally we perform extensive numerical studies to demonstrate that both the profit loss of ignoring the scarcity effect and the value of dynamic pricing under the scarcity effect are significant

per unit vs ad valorem royalties under asymmetric information we study an inside patent holder s optimal licensing policy when it has imperfect information about the value of the patent to its rival the patent holder can choose any two part licensing fee with either per unit or ad valorem royalties we demonstrate that the equilibrium will be either a fully separating contract with different per unit royalty rates or a contract with a single ad valorem royalty that excludes a high cost rival fixed fees will not be used the presence of asymmetric information uniquely drives the per unit royalties that otherwise would not be adopted per unit royalties always generate higher social welfare than ad valorem royalties

sources of technical innovation in the network of companies providing chemical process plant and equipment abstract the purpose of this paper is to explore issues concerning technological innovation in the network of firms linked to the chemical industry with particular reference to the process plant contracting industry while technological and economic maturity inhibit the research and development activities of plant contractors little evidence was found of contractors adopting novel strategies to capture special advantage from technology developed by equipment manufacturing firms it is suggested that the changing economic and technological environment is creating a climate where new or closer contractor equipment manufacturer relationships should receive greater attention appropriate alliances between contractors and equipment manufacturers can not only help to reduce plant design procurement and erection costs but also offer a means to counter the competitive threat from more specialist firms in particular the large equipment manufacturers that possess their own project contracting skills furthermore collaboration in niche and technology fusion type innovation offers a means of generating scope for technological competitive advantage whilst sharing cost and risk whilst contractor equipment manufacturer alliances are one option the nature of the market demands operating company involvement to facilitate commercialisation

manufacturer incentives to improve retail service levels in this paper we provide a solution to the problem of how a manufacturer can provide an incentive to a separately owned retailer to raise its service level above the level it would choose on its own we analyze the effects the manufacturer s incentive has on the individual profits of the retailer and manufacturer as well as their joint profits our work is an application of game theory in which we tackle the problem posed by separate ownership of the two firms and the resulting conflict over the gains from cooperation we utilize a plausible model of service sensitive demand one which is relatively free of ad hoc assumptions our approach has the strength that it proposes a credible solution to the problem of manufacturer retailer cooperation when profits are sensitive to retail service levels our results indicate that the optimal level of incentive for the manufacturer and the resulting shares of the manufacturer and retailer in increased profits are particularly sensitive to the underlying variability of demand and to the relative variability of additional demand induced by higher service levels