willingness to pay for the green food in china abstract with use of payment card survey data of willingness to pay wtp for the green food a unique food certification in china this study finds that age and income are important for the wtp for the green food in china there are structural differences in consumer preference for green food between the large city and the small county consumers in china on average are willing to pay 47 more for green vegetables and 40 more for green meat than for their conventional counterparts compared with the real markets and the previous studies our results are very consistent and reliable

perishable inventory theory a review this paper reviews the relevant literature on the problem of determining suitable ordering policies for both fixed life perishable inventory and inventory subject to continuous exponential decay we consider both deterministic and stochastic demand for single and multiple products both optimal and sub optimal order policies are discussed in addition a brief review of the application of these models to blood bank management is included the review concludes with a discussion of some of the interesting open research questions in the area

design and analysis of simulated consumer choice or allocation experiments an approach based on aggregate data the authors integrate concepts in conjoint analysis and discrete choice theory in econometrics to develop a new approach to the design and analysis of controlled consumer choice or resource allocat

us and german consumer preferences for ground beef packaged under a modified atmosphere different regulations different behaviour new technologies in food processing can provide advantages to consumers and producers but often the technologies are applied in different country specific regulatory climates modified atmosphere packaging extends the shelf life of fresh meat and with the inclusion of carbon monoxide stabilizes colour these packaging technologies can be used in the us and europe although a modified atmosphere package that includes carbon monoxide is allowed only in the us this study applies choice experiments to analyse preferences of us and german consumers towards the meat attributes enhanced by the packaging results show that longer shelf life is preferred in the us as long as the technology is understandable consumers in both countries have clear preferences for cherry red meat colour however providing information on the use of carbon monoxide in the packaging decreases us consumers willingness to pay and increases some german consumers willingness to pay

optimal pricing and return policies for perishable commodities this paper considers the pricing decision faced by a producer of a commodity with a short shelf or demand life a hierarchical model is developed and the results of the single period inventory model are used to examine possible pricing and return policies the paper shows that several such policies currently in effect are suboptimal these include those where the manufacturer offers retailers full credit for all unsold goods or where no returns of unsold goods are permitted the paper also demonstrates that a policy whereby a manufacturer offers retailers full credit for a partial return of goods may achieve channel coordination but that the optimal return allowance will be a function of retailer demand therefore such a policy cannot be optimal in a multi retailer environment it is proven however that a pricing and return policy in which a manufacturer offers retailers a partial credit for all unsold goods can achieve channel coordination in a multi retailer environment this article was originally published in marketing science volume 4 issue 2 pages 166 176 in 1985

age based vs stock level control policies for a perishable inventory system abstract in this study we investigate the impact of modified lotsize reorder control policy for perishables which bases replenishment decisions on both the inventory level and the remaining lifetimes of items in stock we derive the expressions for the key operating characteristics of a lost sales perishable inventory model operating under the proposed age based policy and examine the sensitivity of the optimal policy parameters with respect to various system parameters we compare the performance of the suggested policy to that of the classical q r type policy through a numerical study over a wide range of system parameters our findings indicate that the age based policy is superior to the stock level policy for slow moving perishable inventory systems with high service levels

power approximation for computing s s policies using service level the paper presents an analytic approximation for computing s s policies for single items under periodic review with fixed ordering costs linear holding costs and a service level requirement the replenishment lead time is fixed and unfilled demand is backlogged the approximation is similar to ehrhardt s power approximation however we do not assume the knowledge of shortage costs which are difficult to estimate in practice we define a service level which measures the average backlog relative to the average demand this quantity is easy to understand and frequently used in practice the resulting power approximation policies are easy to compute and require only knowledge of the mean and variance of demand computational results show that the approximation gives a service level which is within one percentage point of the required service level in most cases furthermore the expected total costs of the approximation taking into consideration a penalty cost for stockouts are well within one percent of optimal

channel coordination under price protection midlife returns and end of life returns in dynamic markets this paper examines three channel policies that are used in declining price environments price protection p is a mechanism under which the manufacturer pays the retailer a credit applying to the retailer s unsold inventory when thewholesale price drops during the life cycle midlife returns m allow the retailer to return units partway through the life cycle at some rebate and end of life returns e allow the retailer to return unsold units at the end of the life cycle under decliningretail prices if the wholesale prices and the return rebates are set properly then em i e midlife and end of life returns achieves channel coordination however such a policy may not be implementable because it may require the manufacturer to be worse off as a result of coordination if p is used in addition to em and the terms are set properly then pem guarantees both coordination and a win win outcome if theretail price is constant over time then em is sufficient to guarantee both coordination and a win win outcome

long term and penalty contracts in a two stage supply chain with stochastic demand abstract recent applications of game theoretic analysis to supply chain efficiency have focused on constructs between a buyer the retailer or manufacturer and a seller the supplier in successive stages of a supply chain if demand for the final product is stochastic then the supplier has an incentive to keep its capacity relatively low to avoid creating unneeded capacity the manufacturer on the other hand prefers the supplier s capacity to be high to ensure that the final demand is satisfied the manufacturer therefore constructs a contract to induce the supplier to increase its production capacity most research examines contracting when final demand is realized after the manufacturer places its order to the supplier however if final demand is realized before the manufacturer places its order to the supplier these types of contracts can be ineffective this paper examines two contracts under the latter timing scenario long term contracts in which the business relationship is repeated and penalty contracts in which the supplier is penalized for too little capacity results indicate long term contracts increase the profit potential of the supply chain furthermore the penalty contracts can ensure that the supplier chooses a capacity level such that the full profit potential is achieved

the marketing channel as an equilibrium set of contracts nash bargaining theory and recent developments in economic contract theory are employed in the analysis of the marketing channels individual dyadic contracts involving payment schedules between members of a simple 3 level channel are investigated with particular reference to monitoring problems and intrachannel power relations the interrelations between individual contracts are examined and the equilibrium set of contracts constituting the channel derived the performance of the channel in terms of risk sharing allocative efficiency and the distribution of gains is then evaluated it is found that the risk aversion of channel members and the cost of monitoring and enforcement affect channel efficiency and that under certain types of interdependencies and externalities the nature of the power structure is crucial to channel efficiency

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

multi period modeling of two way price commitment under price dependent demand abstract this paper examines the use of price commitment policies in dynamic contracting in multiple period finite time horizons two specific forms of price commitment are considered one on the part of the retailer through a retail fixed markup contract and one on the part of the manufacturer through a price protection contract optimal policies for each form of price commitment are analytically derived as are optimal policies for the traditional price only and centralized supply chain scenarios that we use as comparisons we prove that optimal retail price and order size solutions exist in each period under the assumption of non increasing price dependent demand we show that the existence of retailer inventory between periods causes the optimal policies to differ from a static single period model further we show that a supplier offers a price protection policy as a signal to the retailer to resolve the gaming that naturally occurs under price only this effectively decouples the multi period dynamic contracting setting into repeated single period scenarios however the resulting behavior can actually inhibit supply chain performance on the retail commitment side we find that retail fixed markup policies are quite effective in improving supply chain efficiency we show that such policies can lead to pareto improvement over price only contracts and can even coordinate the supply chain in some situations

demand for beef from cattle administered growth hormones or fed genetically modified corn a comparison of consumers in france germany the united kingdom and the united states we compare consumer valuations of beef ribeye steaks from cattle produced without growth hormones or genetically modified corn in france germany the united kingdom and the united states results suggest that french consumers place a higher value on beef from cattle that have not been administered added growth hormones than u s consumers however valuations of non hormone treated beef are statistically indistinguishable across germany the united kingdom and the united states results also suggest that european consumers place a much higher value on beef from cattle that have not been fed genetically modified corn than u s consumers copyright 2003 oxford university press

are choice experiments incentive compatible a test with quality differentiated beef steaks this study compares hypothetical and nonhypothetical responses to choice experiment questions we test for hypothetical bias in a choice experiment involving beef ribeye steaks with differing quality attributes in general hypothetical responses predicted higher probabilities of purchasing beef steaks than nonhypothetical responses thus hypothetical choices overestimate total willingness to pay for beef steaks however marginal willingness to pay for a change in steak quality is in general not statistically different across hypothetical and actual payment settings

forecasting and inventory management of short life cycle products in this paper we provide an integrated framework for forecasting and inventory management of short life cycle products the literature on forecasting and inventory management does not adequately address issues relating to short life cycle products we first propose a growth model that can be used to obtain accurate monthly forecasts for the entire life cycle of the product the model avoids limiting data requirements of traditional methods instead it extracts relevant information from past product histories and utilizes the information on total life cycle sales and the peak sales timing using disguised demand data from a personal computer pc manufacturer we validate the model next we model the inventory management problem for the short life cycle environment the uncertainty in demand is modeled through the uncertainty in the realized values of the parameters of the forecasting model the high cost of terminal inventory shortages and rapidly changing procurement costs are all included in the model extensions to the basic model are also developed using optimal control theory we derive a solution that provides valuable information on procurement cutoff time and terminal service levels a detailed example explains the characteristics of the policy and its relevance in decision making many of the issues covered in the models were brought to our attention while implementing a forecasting model at a pc manufacturer the benchmark monthly forecasts and the associated inventory levels provide information that can be very helpful in planning and controlling marketing sales and production

reducing the cost of demand uncertainty through accurate response to early sales traditionally fashion products have incurred high losses due to stockouts and inventory obsolence because long lead times coupled with a concentrated selling season force all or at least most production to be committed before demand information is available under a quick response system lead times are shortened sufficiently to allow a greater portion of production to be scheduled in response to initial demand we model and analyze the decisions required under quick response and give a method for estimating the demand probability distributions needed in our model we applied these procedures with a major fashion skiwear firm and found that cost relative to the current informal response system was reduced by enough to increase profits by 60 relative to the cost that would have been incurred if no response were used optimized response reduces cost by enough to roughly quadruple profits

optimal pricing and inventory strategies with multiple price markdowns over time abstract we study a multiple period discount problem for products that undergo several price cuts over time in the high technology sector electronic component suppliers are often able to offer pre announced price cuts to buyers due to technological innovation that allows them to produce existing components at lower costs in this context suppliers are primarily concerned with the optimal pricing decisions for the components over their life spans in order to achieve the highest possible revenues accordingly the buying firms i e manufacturers or retailers also need to identify the corresponding optimal retail prices and order quantity for the finished products that utilize the components for which discounts are offered frequently in this research we develop a multiple period price discount model that addresses this issue extant research in the price discount literature focuses on supply chains pricing and inventory decisions in the presence of a single price discount the proposed model in contrast offers a systematic decision tool for identifying the optimal strategies throughout a product s life span our results show that a decentralized supply chain characterized by multi period discounts over a product s life typically achieves 75 percent supply chain efficiency we undertake a series of numerical experiments based on the model and discuss their managerial implications

modelling recreation demand using choice experiments climbing in scotland this paper is concerned with the use of thechoice experiment method for modelling thedemand for recreation using the example ofrock climbing in scotland we begin byoutlining the method itself including itstheoretical and econometric underpinnings datacollection procedures are then outlined wepresent results from both nested and non nestedmodels and report some tests for theimplications of choice complexity andrationality finally we compare our resultswith a revealed preference data model based onthe same sample of climbers

consumers preferences for fresh broccolis interactive effects between country of origin and organic labels while international trade in organic products has grown significantly understanding consumers preferences for imported organic foods has remained limited this research examines the impact of country of origin labeling on us consumers choices of organic foods results show that consumer valuation of domestically produced organic broccoli was significantly higher than that of imported organic broccoli adding information about usda organic certification standards rules for imported products mildly increases consumer valuation of imported organic broccoli in some cases these findings suggest that providing such information may have a positive impact on consumer willingness to purchase imported organic products

ordering policy and coordination of a supply chain with two period demand uncertainty abstract we develop a two period game model of a one manufacturer and one retailer supply chain to investigate the optimal decisions of the players where stock out and holding costs are incorporated into the model the demand at each period is stochastic and price sharply drops in mid life we assume the retailer has a single order opportunity and decides how much inventory to keep in the middle of selling season we show that both the price protection mid life and end of life returns pme scheme and the only mid life and end of life returns me scheme may achieve channel coordination and access a win win situation under some conditions the larger the lowest expected profit of the retailer the lower the possibility of win win situation will be combined with the analysis of feasible regions for coordination policies we find that pme scheme is not always better than me scheme from the perspective of implementable mechanism finally we find that adopting the dispose down to ddt policy can bring a larger improvement of the expected channel profit in the centralized setting and it is interesting that by using ddt policy double marginalization occurs only at period 1 and however does not plague the retailer in period 2

supply chain coordination with multiple shipments the optimal inventory subsidizing contracts we study a supply chain involving a supplier retailer relationship when production lead time is long and the selling season is short the retailer has to place an order ahead of the season which resembles the classical newsvendor model however we consider the situation when the supplier agrees to deliver the order in multiple shipments in the season and then the retailer needs to determine the quantity and or timing of each shipment under a centralized setting we derive the optimal quantity and or timing decisions of the retailer under a decentralized setting incentive misalignment arises from ineffective allocation of inventory costs between the parties in addition to the well known double marginalization effect hence we devise an incentive contract which involves a risk sharing mechanism at the end of the season and an inventory subsidizing scheme for the entire season in practice the inventory subsidizing scheme can be implemented in different ways such as a direct subsidizing scheme o

using choice experiments to estimate consumer valuation the role of experimental design and attribute information loads with fixed dimensionality of choice experiments ces previous simulation results show that d optimal design with correct a priori information generates more accurate valuation in the absence of a priori information random designs and designs incorporate attribute interactions result in more precise valuation estimates in this article monte carlo simulations demonstrate that the performances of different design strategies are affected by attribute information loads in ces consumer valuation estimates in simulation settings vary with the number of attributes

price protection in the personal computer industry price protection is a commonly used practice between manufacturers and retailers in the personal computer pc industry motivated by drastic declines of product values during the product life cycle it is a form of rebate given by the manufacturer to the retailer for units unsold at the retailer when the price drops during the product life cycle it is a controversial policy in the pc industry because it is not clear how such a policy benefits the supply chain and its participants we show that price protection is an instrument for channel coordination for products with long manufacturing lead times so the retailer has a single buying opportunity a properly chosen price protection credit coordinates the channel for products with shorter manufacturing lead times so the retailer has two buying opportunities price protection alone cannot guarantee channel coordination when wholesale prices are exoge nous however when the price protection credit is set endogenously together with the wholesale prices channel coordination is restored in the two buying opportunity setting with fixed wholesale prices we show that price protection has two primary impacts 1 shifting sales forward in time and 2 increasing total sales finally we present a simple numerical example that suggests given the current economics of the pc industry that price protection under fixed wholesale prices may benefit the total chain and the retailer but hurt the manufacturer

the right to return this article studies the allocation of responsibility for unsold inventory provision for which is made in practically every distribution contract the two extreme cases are the consignment contract which allocates all the burden to the manufacturer and the no return contract in which retailers purchase the merchandise outright and assume responsibility for unsold inventory contract choices are shown to vary across countries industries products and types of transactions the article identifies six main factors affecting this choice optimal inventory policy in a stochastic retail demand environment relative advantage in disposing of the unsold inventory optimal risk allocation incentives to invest in promotions and provide services to increase consumer demand information asymmetry and costs associated with the consignment contract per se several testable implications are presented and the choice of contracts in the publishing industry is shown to be consistent with the predictions of the model

the importance of regret minimization in the choice for renewable energy programmes evidence from a discrete choice experiment abstract this study provides a methodologically rigorous attempt to disentangle the impact of various factors unobserved heterogeneity information and environmental attitudes on the inclination of individuals to exhibit either a utility maximization or a regret minimization behaviour in a discrete choice experiment for renewable energy programmes described by four attributes greenhouse gas emissions power outages employment in the energy sector and electricity bill we explore the ability of different models multinomial logit random parameters logit and hybrid latent class and of different choice paradigms utility maximization and regret minimization in explaining people s choices for renewable energy programmes the pure random regret random parameters logit model explains the choices of our respondents better than other models indicating that regret is an important choice paradigm and that choices for renewable energy programmes are mostly driven by regret rather than by rejoice in particular we find that our respondents choices are driven more by changes in greenhouse gas emissions than by reductions in power outages finally we find that changing the level of information to one attribute has no effect on choices and that being a member of an environmental organization makes a respondent more likely to be associated with the utility maximization choice framework

augmenting travel cost models with contingent behavior data this paper proposes contingent behavior survey questions as a valuable supplement to observed data in travel cost models of non market demand for recreational resources a set of observed and contingent behavior results for each survey respondent allows the researcher to control for individual heterogeneity by taking advantage of panel data methods when exploring the nature of respondent demands the contingent scenarios also provide opportunities to a test for differences between observed and contingent preferences and or b assess likely demands under conditionsbeyond the domain of observed variation in costs or resource attributes most importantly contingent scenarios allow the researcher to imposeexogenously varying travel costs exogenous imposition of travel costs together with panel methods reduces the omitted variables bias that plagues observed data travel cost models of recreational demand using a convenience sample of data for illustrative purposes we show how to estimate the demand for recreational angling by combining observed and contingent behavior data we begin with simple naive pooled poisson models and progress to more theoretically appropriate fixed effects panel poisson specifications

do hypothetical and actual marginal willingness to pay differ in choice experiments application to the valuation of the environment abstract in this paper we test the validity of choice experiments with donations for environmental projects in particular we test whether or not there are differences in preferences between a hypothetical and an actual choice experiment our experiments indicate no differences in addition internal tests of validity indicate transitive and stable preferences in both experiments although there are some indications of possible learning effects during the experiment

pricing and lead time decisions in decentralized supply chains this paper studies a decentralized supply chain consisting of a supplier and a retailer facing price and lead time sensitive demands a stackelberg game is constructed to analyze the price and lead time decisions by the supplier as the leader and the retailer as the follower the equilibrium strategies of the two players are obtained using the performance of the corresponding centralized system as a benchmark we show that decentralized decisions in general are inefficient and lead to inferior performance due to the double marginalization effect however further analysis shows that the decision inefficiency is strongly influenced by market and operational factors and if the operational factors are dominating it may not be significant this shows that before pursuing a coordination strategy with retailers a supplier should first improve his or her own internal operations

the impact of deal proneness on wtp estimates in incentive aligned value elicitation methods even after controlling for hypothetical biases some incentive aligned value elicitation methods still produce different willingness to pay wtp estimates in this study we compare wtp estimates from three incentive aligned value elicitation methods real choice experiment rce real double bounded dichotomous contingent valuation rcvm and becker degroot marschak auction bdm we find that participants aggressiveness in obtaining low prices i e deal proneness influences wtp estimates in the bdm auction but not those elicited from the rce and rcvm the participants with higher levels of deal proneness tend to submit lower bids in the bdm auction the discrepancies in wtp estimates between different incentive aligned procedures are narrower for participants with lower levels of deal proneness our results indicate that the bids in bdm auctions may be understated and the auction mechanism may induce the gambling behavior of people who are deal prone that is whether the bdm auction is truly incentive aligned is again called into question we also discuss the practical implications for food retailers

manufacturer s return policies and retail competition manufacturers returns policies are a common feature in the distribution of many products the obvious rationale for returns policies is insurance practitioners not surprisingly have a different perspective and view returns as a cost of doing business in this paper we study the strategic effect of returns policies on retail competition and highlight its profitability implications for a manufacturer the setting for our research is the distribution of products with uncertain demand limited shelf lives and retail competition our objective is to provide a better understanding of when manufacturers should adopt returns policies the insights are obtained with a model based on the economics of strategy and decision making under uncertainty we show that when retailing is competitive and there is no uncertainty in demand a returns policy subtly induces retailers to compete more intensely the provision of a returns policy reduces retail prices without affecting wholesale prices thereby reducing retailer margins and improving manufacturer profitability the intuition is that with a returns policy cournot like levels of retail stocks cannot be sustained each retailer will order stocks so that it will not be constrained by stocks and so intensifying retail competition when however demand is uncertain and there is a single retailer a returns policy encourages the retailer to over stock and so decreases upstream manufacturer profits while the provision of a returns policy leads to lower retail margins the optimality of returns policy depends on the overall uncertainty and marginal cost a returns policy reduces the dispersion in retail prices between the high and low states of demand and the range of retail prices in the returns case is contained within the range of retail prices for the no returns case in the general setting when there are competing retailers and demand is uncertain there is a trade off for the manufacturer between the benefits more intense retail competition and the costs excessive stocking of a returns policy we find that a manufacturer should accept returns when the marginal production cost is sufficiently low and demand uncertainty is not too great to validate the results of our theory we conduct an empirical test with data from a major u s retailer the tests confirm our prediction that a returns policy intensifies retail competition and reduces retailer margins our theory and empirical test should interest practitioners and researchers in distribution especially those concerned with managing retail competition

how do respondents process stated choice experiments attribute consideration under varying information load the popularity of stated choice sc experiments has produced many design strategies in which researchers use increasingly more complex choice settings to study choice behaviour when the amount of information to assess increases we wonder how an individual handles such information in making a choice defining the amount of information as the number of attributes associated with each choice set we investigate how this information is processed as we vary its complexity four ordered heterogeneous logit models are developed each for an sc design based on a fixed number of attributes in which the dependent variable defines the number of attributes that are ignored we find that the degree to which individuals ignore attributes is influenced by the dimensionality of the sc experiment the deviation of attribute levels from an experienced reference alternative the use of adding up attributes where feasible the number of choice sets evaluated and the personal income of the respondent the empirical evidence supports the view that individuals appear to adopt a range of coping strategies that are consistent with how they process information in real markets and that aligning choice complexity with the amount of information to process is potentially misleading relevancy is what matters copyright 2006 john wiley sons ltd

optimal ordering and pricing policy for demand functions that are separable into price and inventory age abstract we formulate and analyze two models for determining the optimal pricing order quantity and replenishment period for items whose demand function is separable into components of price and inventory age the first model assumes a multiplicative demand function we provide conditions which are satisfied by most common price dependent demand functions to reduce the three variable profit maximization problem into a single variable problem which can be solved using an efficient line search method next we show that a genuine additive model cannot exist and instead suggest and analyze a pseudo additive model however this model is more limited than the multiplicative model in its ability to incorporate various combinations of price and inventory age effects and reduction of the maximization problem into a single variable problem is more complicated except in the case of a linear price effect which is further analyzed for both models we show that the optimal solution satisfies the first order condition for equilibrium under a monopoly with a modification that includes inventory holding costs we solve numerical examples to illustrate the solution procedures

habit spillovers or induced awareness willingness to pay for eco labels of rice in china abstract the willingness to pay wtp for eco labeled rice is investigated for chinese consumers using choice experiments with information interventions the mixed logit model shows preference heterogeneities and the latent class model unveils two sources pro environmental behaviors with spillover effects which are defined as catalyst behaviors and the awareness about imperatives of ecological farming which is defined as induced awareness classification results identify that using bp bags and sorting waste are catalyst behaviors as the multivariate ordered probit model implies consumers with higher educational attainment and family income levels are more likely to adopt these behaviors instead of creating the preference for eco labels the induced awareness is only found to strengthen preferences that already exist the results of this study provide policy implications for the design of proper strategies to develop the eco labeled food market especially in developing economies

an approximation to the continuous review inventory model with perishable items and lead times a continuous review perishable inventory model based on approximations to the expected outdating the expected shortage quantity and the expected inventory level is developed to determine a best q r ordering policy under a positive order leadtime when the total expected average cost per unit time is minimized the approximation method is simple and verified by a comparison with the weiss model the results reveal that the mean absolute deviation from the optimal total expected average cost per unit time is only 0 58 this paper also compares the proposed model to the conventional model with no perishability a value is given to the item lifetime indicating when an approximate answer approaches closely to the conventional ordering policy finally a simulation model written in simscript ii 5 is used to validate the approximate results

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

using choice experiments to value the environment this paper we outline the choice experiment approach to environmental valuation this approach has its roots in lancaster s characteristics theory of value in random utility theory and in experimental design we show how marginal values for the attributes of environmental assets such as forests and rivers can be estimated from pair wise choices as well as the value of the environmental asset as a whole these choice pairs are designed so as to allow efficient statistical estimation of the underlying utility function and to minimise required sample size choice experiments have important advantages over other environmental valuation methods such as contingent valuation and travel cost type models although many design issues remain unresolved applications to environmental issues have so far been relatively limited we illustrate the use of choice experiments with reference to a recent uk study on public preferences for alternative forest landscapes this study allows us to perform a convergent validity test on the choice experiment estimates of willingness to pay

choice modelling approaches a superior alternative for environmental valuation in this paper we examine some popular choice modelling approaches to environmental valuation which can be considered as alternatives to more familiar valuation techniques based on stated preferences such as the contingent valuation method a number of choice modelling methods are consistent with consumer theory and its focus on an attribute based theory of value permits a superior representation of many environmental management contexts however choice modelling surveys can place a severe cognitive burden upon respondents and induce satisficing rather than maximising behavioural patterns in this framework we seek to identify the best available choice modelling alternative and investigate its potential to solve some of the major biases associated with standard contingent valuation we then discuss its use in the light of policy appraisal needs within the eu an application to the demand for rock climbing in scotland is provided as an illustration

agency costs in a supply chain with demand uncertainty and price competition in this paper we model a manufacturer that contracts with two retailers who then choose retail prices and stocking quantities endogenously in a bayesian nash equilibrium if the manufacturer designs a contract that is accepted by both retailers it sets the wholesale price as a compromise between two conflicting roles reducing intrabrand retail price competition and inducing retailers to stock closer to first best levels that is optimum for the supply chain as a whole in equilibrium fill rates are less than first best if on the other hand the manufacturer eliminates retail competition by designing a contract accepted by only one retailer the assignment of consumers to retailers is inefficient in either equilibrium the performance of the supply chain is strictly less than first best however the manufacturer achieves first best retail prices and fill rates if it can subsidize the retailers leftover inventory absent such subsidies the two retailer equilibrium arises when the two retailers compete less intensively in that equilibrium numerical results indicate that the value of subsidizing unsold inventory is increasing in demand uncertainty intensity of retail competition and salvage value of inventory and is decreasing in manufacturing cost and opportunity cost of shelf space

country of origin labeling for complex supply chains the case for labeling the location of different supply chain links we investigate the value of a country of origin label cool that separately identifies the geographic location of different stages in a food product s supply chain we estimate the willingness to pay wtp of u s consumers for a packaged cereal product where the key grain ingredient may be grown in one country and processed in a second country multicountry supply chain and compare it to equivalent products that have both stages located in a single country we find consumer wtp for products with single country and multicountry supply chains are statistically different meaning that simplifying a multicountry label by listing only the country where the ingredients are grown or only the country where the ingredients are processed can result in different consumer values we also find that for countries with a poor quality reputation consumers respond more negatively when that country has the last touch than when that country s involvement is limited to upstream supply chain links

trade credit for supply chain coordination abstract trade credit is a seller s short term loan to the buyer allowing the buyer to delay payment of an invoice it has been the largest source of working capital for a majority of business to business firms in the united states numerous theories have been proposed to explain trade credit mainly from finance perspectives it has also been an important issue in supply chain management surprisingly most literature in supply chain management has examined the retailer s stocking policies given a supplier s trade credit this paper attempts to shed light on trade credit from a supplier s perspective and presents it as a tool for supply chain coordination specifically we explicitly assume firms financial needs for inventory following a newsvendor framework we assume that the supplier grants trade credit and markdown allowance given the supplier s offer the retailer determines order quantity and the financing option for the inventory either trade credit or direct financing from a financial institution our result shows that the supplier s markdown allowance alone cannot fully coordinate the supply chain if the retailer employs direct financing positive financing costs call for trade credit in order to subsidize the retailer s costs of inventory financing using trade credit in addition to markdown allowance the supplier fully coordinates the retailer s decisions for the largest joint profit and extracts a greater portion of the maximized joint profit

supplier manufacturer coordination in capacitated two stage supply chains abstract manufacture to order is an increasingly popular strategy in commodity electronics and other similar markets where many different product configurations can be produced from common components to succeed in this environment manufacturers need to keep both cost and order fulfillment time low in this article we compare three different mechanisms that a manufacturer whose revenues depend on order delays may use to affect its component supplier s inventory decisions these mechanisms are specifying components inventory level offering a share of the earned revenues to the supplier called simple revenue sharing and offering a two part revenue sharing scheme we show that whereas the first two approaches do not lead to supply chain coordination the two part scheme does we demonstrate with numerical experiments that up to a point the component supplier benefits from having a high utilization of its production facility whereas the manufacturer benefits from having excess production capacity

integration of capacity pricing and lead time decisions in a decentralized supply chain abstract we consider a decentralized supply chain consisting of a supplier and a retailer facing price and lead time sensitive demand the decision process is modelled by a stackelberg game where the supplier as a leader determines the capacity and the wholesale price and the retailer as a follower determines the sale price and lead time the equilibrium strategy of these two players is obtained by comparing with the performance of the corresponding decentralized chain without capacity decision as a benchmark we characterize the impact of capacity decision on the players profit i e the supplier s profit may be always significantly increased while the retailer s profit is only increased when the capacity is underestimated in the benchmark model further we demonstrate that the integration of capacity decision can also significantly reduce the profit loss caused by double marginalization finally we find that the revenue sharing and two part tariff contracts cannot coordinate the decentralized channel instead we propose a franchise contract with a contingent rebate that can achieve channel coordination and a win win outcome

price markdown scheme in a multi echelon supply chain in a high tech industry this paper studies the price markdown scheme in a supply chain that consists of a supplier a contract manufacturer cm and a buyer retailer the buyer subcontracts the production of the final product to the cm the cm buys the components from the supplier and charges the buyer a service fee for the final product produced the price markdown is made possible by the supplier with the development of new manufacturing technologies that reduce the production cost for the sourced component consequently the buyer adjusts the retail price in order to possibly stimulate stronger demand that may benefit both the supplier and the buyer under this scenario we identify the optimal discount pricing strategies capacity reservation and the stocking policies for the supplier and the buyer we also investigate the optimal inventory decision for the cm to cope with the price discount by considering both demand and delivery uncertainties our results suggest that higher production cost accelerates the effects of higher price sensitivity on lowering the optimal capacity and stocking policies in the supply chain the effect of mean demand error on the optimal prices is relatively marginal compared with that from price sensitivity we also found that increasing the standard deviation of the random demand does not necessarily increase the stocking level as one would predict the results show that delivery uncertainty plays an important role in the inventory carried beyond the price break we discuss potential extensions for future research

the impacts of the full returns policy on a supply chain with information asymmetry abstract in contrast to the existing return policies literature assuming that information is symmetrical between the manufacturer and the retailer we study the full returns policy s impact on supply chains with information asymmetry we first study the case that the base level of the demand follows a discrete distribution with two states we find that the retailer benefits from the full returns policy in all circumstances while the manufacturer and the supply chain are better off under some conditions we then consider the situation in which the base level of the demand is a type of ar 1 process

implementing cool comparative welfare effects of different labeling schemes country of origin labeling cool is being implemented in different forms and degrees in the united states and other countries across the world the first implementation of mandatory country of origin labeling mcool in the united states was for seafood in 2005 this is an example of partial mcool because it exempts the foodservice sector and excludes processed seafood from labeling using a conceptual framework we analyze the welfare impacts of partial mcool when compared to no voluntary and total mandatory cool taking into account imperfect competition in the downstream markets information asymmetry and diversion of low quality product to the unlabeled market the model is general enough to apply to any incomplete regulation for which the perceived low quality product is required to be labeled such as the labeling of genetically modified food in the european union our results show that when consumers have a strong enough preference for domestic relative to imported product regulators can overestimate the gain in consumer welfare from partial mandatory labeling if they ignore the diversion of lower quality imports to the unlabeled sector we show that if the preference for domestic product is large enough total mcool benefits the home market the most overall including domestic consumers and producers but not the imperfectly competitive downstream agents however if total mcool is too costly to implement partial mcool is the second best solution but only if consumers falsely believe the unlabeled product to be of higher quality than it truly is our results suggest more research is needed to determine the extent to which consumers value the information provided by mcool and to enable regulators to consider the welfare impact of diversion in evaluating incomplete mandatory labeling regulations

analysis of supply chains with quantity based fixed incentives abstract this paper examines the use of quantity based fixed incentives to coordinate inventory decisions in a decentralized supply chain we consider a two stage supply chain of autonomous supplier and distributor and prove that the optimal ordering policy for the newsvendor distributor under fixed incentives is an s s type policy we further show that external and internal quantity based incentives can restore channel coordination in single period and channel members can benefit through arbitrary splitting of the resulting additional chain profit the single period results are extended to multiple periods and the impact of fixed incentives on the distributor s optimal stocking policy and channel efficiency are examined under three different multi period supplier strategies numerical examples are used to compare the multi period strategies and to provide additional managerial insights the results show that contrary to common belief incentive plans developed and maintained based only on current inventory data perform poorly in long term and that such incentive plans must be periodically updated to enhance their efficiency furthermore we show that high level of incentives designed to push too much inventory downstream of the supply chain can actually reduce the chain s efficiency

a diffusion theory model of adoption and substitution for successive generations of high technology products this study deals with the dynamic sales behavior of successive generations of high technology products new technologies diffuse through a population of potential buyers over time therefore diffusion theory models are related to this demand growth furthermore successive generations of a technology compete with earlier ones and that behavior is the subject of models of technological substitution building upon the bass bass f m 1969 a new product growth model for consumer durables management sci 15january 215 227 diffusion model we develop a model which encompasses both diffusion and substitution we demonstrate the forecasting properties of the model by estimating parameters over part of the data and projecting shipments for later periods

effects of label information on consumer willingness to pay for food attributes choice experiments ces are often used to elicit consumer willingness to pay wtp for food attributes a concern about these approaches is that food attributes provided to respondents are assumed independent of attributes not provided we use surveys containing a series of ces to investigate effects of adding beef steak attributes wtp for important attributes in the ces decrease when the number of attributes increases from three to four while wtp increases when the number of attributes increases from four to five changes in wtp for attributes depend on their relationships with newly added attributes and the number of attributes presented copyright 2007 oxford university press

approximations for the relative outdating of perishable products by combining stochastic modeling simulation and regression modeling abstract in this paper we derive approximations for the expected amount of outdating waste in an inventory system with perishable products periodic review positive lead time fixed case pack sizes and a first in first out withdrawal policy demand is discrete and stochastic demand which is not met from inventory on hand will be lost the approximations can be used to evaluate how the amount of outdating can be reduced by changing the safety stock and or the product and demand characteristics we first derive approximations in an analytical way and then use regression to improve these approximations the final approximation is very fast and performs very well the mean and standard deviation of the approximation error are equal to 0 01 and 0 78 moreover the approximation is applicable in situations with parameter settings which are frequently encountered in practice and for which no other approximations have been derived in the literature before

impact of satisficing behavior in online surveys on consumer preference and welfare estimates conducting online surveys through consumer panels has become increasingly popular for researchers to assess consumers preferences and attitudes for the purpose of obtaining welfare estimates because they are inexpensive flexible and allow for fast feedback interestingly few studies have examined the behaviors of online survey panelists particularly their satisficing behaviors on welfare measures this study demonstrates the use of validation questions trap questions to detect survey respondents satisficing behavior and its impact on consumer choice willingness to pay wtp and consumer surplus cs estimates we find that respondents who fail a validation question vq are more likely to violate the weak axiom of revealed preferences warp in the choice experiment the estimates for preference parameters wtp and cs are statistically different between those who pass and those who fail the vq in addition the wtp and cs from respondents passing the vq in general have smaller variances than those from respondents failing the vq these results indicate that without controlling for potential satisficing behaviors online surveys may produce less efficient estimates estimates with larger variance of welfare measures

s 1 s policies for perishable inventory we consider s 1 s policies for a single item whose lifetime is fixed and known with certainty demands are generated by a stationary poisson process and there is a positive leadtime for replenishment we believe this study gives the only analysis for perishables with a positive order leadtime the analysis involves the derivation of the stationary distribution of the s dimensional stochastic process corresponding to the time elapsed since the last s orders were placed this distribution is then used to obtain an expression for the expected cost rate of operating the system in steady state as a function of s a computer program has been developed to compute optimal s values and expected annual costs we report a computation for a variety of system parameters which show some of the unusual features of the problem finally we show how this model can be used in the context of a problem of optimizing availability of operating equipment subject to scheduled maintenance as well as random failure

raised without antibiotics lessons from voluntary labeling of antibiotic use practices in the broiler industry voluntary labeling improves market efficiency if consumers receive the product characteristics they demand and producers are compensated for producing these characteristics for this to occur label claims have to be truthful credible and understandable we examine the introduction of raised without antibiotics rwa label claims in the broiler industry by perdue farms perdue and tyson foods tyson in 2007 and the events that follow we ask whether voluntary label claims were able to improve efficiency in the market for rwa chicken products in this case evidence presented as part of court testimony suggests that tyson did not deliver the rwa attribute that consumers demanded competitors suffered and tyson profited from introducing what was ruled to be a false and misleading label claim to the marketplace while the media informed consumers and stockholders of these events we found little evidence in publicly available data literature or documentation from court cases that tyson suffered significant harm in the market or from stockholders the u s department of agriculture food safety and inspection service did ultimately remove tyson s label claims from the marketplace and the legal system provided some redress to competitors and consumers even so labels with animal raising claims such as rwa and voluntary process based label claims in general continue to be challenged by similar issues that is consumer confusion the absence of universally accepted definitions and varying degrees of credibility

optimal inventory policy for a perishable item with demand function sensitive to price and time abstract we formulate a model for determining the optimal pricing order quantity and replenishment period for perishable items with price dependent and time dependent demand the items have a fixed shelf life and the demand rate decreases linearly in the selling price and polynomially over the time after replenishment until it vanishes either at the reservation price or at expiration time we prove that the three variable profit maximization problem can be reduced into a single variable problem in which the variable is the duration of the replenishment period we show that the profit function is strictly pseudo concave and provide means of obtaining the optimal policy three numerical examples are presented to demonstrate the model accompanied by a sensitivity analysis

channel coordination using product returns for a supply chain with stochastic salvage capacity abstract we examine returns policy in a newsboy framework unlike the prior literature however we assume that both supplier and retailer have limited and stochastic salvage capacities we first analyze the case of integrated supply chain in which the agents decisions are fully coordinated for the joint profits the result prescribes a partial returns policy in which the retailer returns a part of the leftovers to the supplier and liquidates the remainder through its clearance sale in a decentralized system the supplier should motivate the retailer to duplicate the outcome of the integrated system in choosing order and returns quantities we propose three coordination contracts of which each uses two benefit transfer schemes as an incentive to the retailer instead of using a single benefit scheme as in the prior literature all three effectively coordinate the supply chain the supplier as a stakelberg leader chooses the most profitable one since each contract yields the different shares of the agents profits

producer decision making under uncertainty role of past experiences and question framing limited research examines the role of reference points or how uncertain outcomes are processed in producer decisions this study employs a survey containing a split sample choice experiment varying how uncertain outcomes are portrayed and assesses multiple candidate reference points results suggest that u s cattle producers use the best outcome experienced as reference points in their decisions and the method by which uncertain outcomes are presented impacts loss aversion marginal willingness to pay and market participation estimates this illustrates how research employing split samples multiple reference points and alternative methods of portraying uncertain outcomes may better identify producer decision making

inventory problems with perishable items fixed lifetimes and backlogging our model deals with a single product and a single stock location with poisson demand the replenishment leadtime from the external supplier is fixed the lifetime of the product is also fixed and aging is assumed to begin when the order is placed when the age of a unit has reached its lifetime the unit is useless and thus discarded from the system the replenishment policy is assumed to be an order up to s policy demand that cannot be met immediately is backordered we consider three different cases where the service requirements are represented by 1 backorder costs per unit 2 a service level constraint 3 backorder costs per unit and time unit cases 1 and 2 are solved exactly while an approximation is developed for case 3 we show how the results from an earlier paper assuming lost sales can be used to solve the considered problems our results are compared to the results in a related paper considering q r policies c 2009 elsevier b v all rights reserved less

demand uncertainty and returns policies manufacturers facing uncertain demand may induce distributors to carry ample stocks of their products by agreeing to accept returns of unsold goods for credit the authors model the manufacturer s decision to accept returns showing that this decision depends crucially on the nature of the demand uncertainty uncertainty over customer arrivals favors returns while uncertainty over consumers valuation of the manufacturer s product leads distributors to set retail prices too high from the manufacturer s standpoint when returns are allowed the authors show that returns can be expected to raise retail prices while maintaining shrinking distributor margins copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association