strategic buyers and exclusionary contracts this paper characterizes equilibrium exclusionary contracts between buyers an incumbent firm and a potential entrant when buyers can either vertically integrate or contract with the outside entrant in this setting exclusionary contracts are generally shown to be efficient and to deter inefficient entry that would otherwise occur with multiple unorganized buyers equilibrium contracts are shown to take a divide and conquer form and in some cases to deter some efficient entry in such cases efficient contracting can be restored by a policy that prohibits price discrimination and gives agents free reign to sign exclusionary agreements copyright 1994 by american economic association

a dynamic marketing operations interface model of new product updates abstract two critical success factors for nearly any firm are the introduction of new products and the integration of the marketing and operations functions within the business enterprise the series of products being considered are associated with sequential non disruptive innovations in technology but disruptive in fashion the study presents a model that integrates and builds upon the popular dynamic bass model for new product diffusion in marketing and the wagner and whitin dynamic lot sizing model a seminal model in operations management the end result is a model that simultaneously determines the optimal timing for the introduction of new product generations pricing production timing and produced quantities this model is then used to examine the impact of variations in marketing and operations parameters on both optimal profit and optimal product lifecycle length the study finds that larger profit and a faster pace of new product introductions are generally associated with faster diffusion lower price elasticity larger market potential lower new product introduction cost and more costly consumer products

multi item quick response system with budget constraint quick response mechanisms based on effective use of up to date demand information help retailers to reduce their inventory management costs we formulate a single period inventory model for multiple products with dependent multivariate normal demand distributions and a given overall procurement budget after placing orders based on an initial demand forecast new market information is gathered and demand forecast is updated using this more accurate second forecast the retailer decides the total stocking level for the selling season the second order is based on an improved demand forecast but it also involves a higher unit supply cost to determine the optimal ordering policy we use a computational procedure that entails solving capacitated multi item newsboy problems embedded within a dynamic programming model various numerical examples illustrate the effects of demand variability and financial constraint on the optimal policy it is found that existence of a budget constraint may lead to an increase in the initial order size it is also observed that as the budget available decreases the products with more predictable demand make up a larger share of the procurement expenditure

confidence based optimisation for the newsvendor problem under binomial poisson and exponential demand abstract we introduce a novel strategy to address the issue of demand estimation in single item single period stochastic inventory optimisation problems our strategy analytically combines confidence interval analysis and inventory optimisation we assume that the decision maker is given a set of past demand samples and we employ confidence interval analysis in order to identify a range of candidate order quantities that with prescribed confidence probability includes the real optimal order quantity for the underlying stochastic demand process with unknown stationary parameter s in addition for each candidate order quantity that is identified our approach produces an upper and a lower bound for the associated cost we apply this approach to three demand distributions in the exponential family binomial poisson and exponential for two of these distributions we also discuss the extension to the case of unobserved lost sales numerical examples are presented in which we show how our approach complements existing frequentist e g based on maximum likelihood estimators or bayesian strategies

production planning in the case of uncertain individual demand extension for an mrp ii concept abstract to gain competitive advantage firms have increased their number of variants in recent years but as a consequence it has become more and more difficult to forecast demand data at the level of individual products over the planning horizon however practical experience shows that forecasts of aggregate demand are quite accurate exact data for individual products can be determined for the current but not for the remaining periods for the remaining periods only upper and lower bounds of the demand data for individual products can be predicted with certainty in many cases this means that production planning should follow a hierarchical planning concept first production planning should be conducted at the aggregate level over the planning horizon to determine simultaneously the resource requirements regular capacity and overtime and the quantities of the product groups in order to satisfy aggregate demand second for the immediate scheduling period the detailed planning level should determine how available production resources have to be allocated to the individual products subject to some constraints imposed by the aggregate plan mrp ii manufacturing resource planning is a production planning system which is based on a hierarchical concept and has been developed for such complex production situations the paper concludes that the mrp ii concept is only partially suited to production planning in the case of uncertain demand a hierarchical model which can be incorporated into the mrp ii concept is therefore proposed for uncertain demand an alternative method for uncertainty reduction is also briefly discussed

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

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

unemployment and female labour supply the definition of labour force participation in the standard labour supply model stands in sharp contrast to that used in compiling the labour force statistics in the labour supply models only those supplying positive hours of work are considered to be labour force participants on the other hand participation in the labour force statistics is often defined to include not only those supplying positive hours but also those actively searching for work this paper is an attempt to reconcile these concepts by allowing unemployed workers to enter a generalisation of the standard labour supply model this turns out to be a convenient way to enter demand side factors directly into the determination of an individual s labour market position the model is applied with some success to the working behaviour of married women in the uk family expenditure survey

a bayesian approach to determine the value of information in the newsboy problem abstract the potential benefits of demand forecasting in a newsboy problem are to decrease the risk of overstocking or shortage but forecasting is usually not free in this paper a model to help the decision maker in a newsboy problem to assess the value of information is presented first two cases on available demand information are considered to develop an upper bound of the cost that the decision maker would spend on forecasting then a bayesian approach to forecasting is proposed and evai the expected value of additional information is computed to help the decision maker in deciding whether to use the extra information finally the relationship between the evai and model parameters is discussed

labour force transitions among low wage married couples a simultaneous probability model interdependence in the labour force transitions of low income married couples is studied it utilizes a simultaneous probability model in which each person s job exit depends in part on the job transitions of their spouse estimates are based on data from the seattle denver income maintenance experiments the evidence appears to indicate that wives emulate the nonwork status of their husbands wives of exit prone husbands are themsleves more exit prone and less likely to enter employment evidence in favour of reverse dependence of husbands status on wives exits appears to be weak and imprecise

efficient supply contracts for fashion goods with forecast updating and two production modes we examine the problem of developing supply contracts that encourage proper coordination of forecast information and production decisions between a manufacturer and distributor of high fashion seasonal products operating in a two mode production environment the first production mode is relatively cheap but requires a long lead time while the second is expensive but offers quick turnaround we focus on contracts of the form w1 w2 b wherewi is the wholesale price offered for production modei andb is a return price offered for items left over at the end of the season we find that such a contract can coordinate the manufacturer and distributor to act in the best interest of the channel the pricing conditions needed to ensure an efficient solution vary depending on the degree of demand forecast improvement between periods and the manufacturer s access to forecast information we also examine whether these conditions ensure a pareto optimal solution with respect to two traditional production settings

married women s hours and participation revisited elasticity estimates are presented for participation and hours of work for a sample of married women in the social change and economic life initiative sceli 1986 data set a logit model is used to estimate the participation function and a tobit model is employed to estimate an hours of work equation the results are in agreement with the evidence available for the uk the own wage hours of work elasticity is found to be relatively elastic with negligible effects detected for non labour income and the husband or spouse s wage the effects on participation of an unemployed husband or spouse were examined and found to have a strong negative effect

benefits and the labour supply of women married to unemployed men this paper seeks to explain the low labor force participation rates of women married to unemployed men in the reducing the net increment to household income that would result from the wife s employment simple probit models of the participation and part time full time decisions are estimated using a large cross sectional data set the results confirm the importance of severe disincentive effects controlling for labor market conditions income related benefits are found to create worse problems than national insurance benefits both types impede part time work in particular copyright 1990 by royal economic society

husband s unemployment and wife s labor supply the added worker effect across europe this article investigates the responsiveness of women s labor supply to their husband s job loss the so called added worker effect the authors contribute to the literature by taking an explicit internationally comparative perspective in analyzing the variation of the added worker effect across welfare regimes using longitudinal data from the european union statistics on income and living conditions eu silc survey covering 28 european countries from 2004 to 2013 they find evidence of an added worker effect which however varies over both the business cycle and the different welfare regimes in europe the latter result might be explained in part by differences in the design of the unemployment benefit system across countries which create different incentives for the labor supply of wives of unemployed men

social security policy in a changing labour market conditions in the uk labour market of the 1990s are markedly different from those which prevailed in the post war period when the modern welfare state was created the main differences include a growth in long term unemployment in female part time employment and in low paid employment and self employment in some respects social security policy has adapted to reflect these new patterns the clearest example of this is the introduction and enhancement of in work benefits such as family credit however two of the main strands of benefit policy in recent decades greater reliance on family based means testing and an increased role for private insurance do not fit so well with labour market trends in the case of the privatization of mortgage insurance the result is likely to be further redistribution away from those in insecure or low paid employment copyright 1995 by oxford university press

consumer strategies limiting the monopolist s power multiple and joint purchases i characterize the menu of bundles price quantity combinations offered by a monopolist when consumers can buy several bundles share bundles with others or do both in a two type setting i find that although perfect arbitrage prevents any price discrimination partial arbitrage in the form of multiple or joint purchases may actually lead to more pronounced price discrimination than when consumers can only pick one single bundle further clear predictions emerge for the price pattern contrasting with the existing literature with multiple purchases only the firm offers strict quantity discounts with joint purchases only discounts are infeasible

a model of female labour supply in which supply is dependent upon the chances of finding a job in this paper we extend a model of female labour supply by considering the impact of the local labour market thus in our model a woman supplies her labour if she has both made the decision to participate and found a job this extension is of particular importance in times of high unemployment when discouraged worker effects will be at their strongest we also consider the contribution of such a model to the debate concerning the labour supply of women married to men who are unemployed

inventory decisions for emergency supplies based on hurricane count predictions abstract this paper addresses a stochastic inventory control problem for manufacturing and retail firms who face challenging procurement and production decisions associated with hurricane seasons specifically the paper presents a control policy in which stocking decisions are based on a hurricane forecast model that predicts the number of landfall hurricanes for an ensuing hurricane season the multi period inventory control problem is formulated as a stochastic programming model with recourse where demand during each pre hurricane season period is represented as a convolution of the current period s demand and an updated estimate of demand for the ensuing hurricane season due to the computational challenges associated with solving stochastic programming problems recent scenario reduction techniques are discussed and illustrated through an example problem the proposed model specifies cost minimizing inventory strategies for simultaneously meeting stochastic demands that occur prior to the hurricane season while proactively preparing for potential demand surge during the season

hierarchical model for production planning in the case of uncertain demand the paper deals with hierarchical production planning for a multiperiod model consisting of an aggregate planning level and a detailed planning level in the case of uncertain demand at the beginning the detailed demand for the actual planning period is known whereas for future planning periods only upper and lower bounds of detailed demand are known on the other hand the aggregate demand on the product group level is supposed to be deterministic at each planning period over the whole planning horizon for the aggregate planning level robust production plans i e aggregate production plans which can be disaggregated to a feasible detailed plan for every possible detailed demand are proposed and a consistent disaggregation is executed for the detailed planning level two sets static and dynamic of sufficient conditions for robustness of the aggregate plan as well as dynamic disaggregation conditions are derived these sufficient conditions are a generalization of the results of lasserre and merce the performance of the sufficient conditions are demonstrated by a computational study which shows the potential advantage of the approach

customer coalitions monopoly price discrimination and generic entry deterrence abstract this paper analyzes the interplay between a profit maximizing monopolist and a set of consumers who are able to form coalitions that bargain with the monopolist and or integrate into production we show that the monopolist will deter the formation of these countervailing coalitions through strategic selection of generic limit price offers to each consumer these limit prices are derived as subgame perfect equilibria in two alternative models of customer monopoly interplay in both models price discrimination emerges in environments wherein it has previously been considered unprofitable welfare analysis of the equilibria demonstrates the procompetitive effects of potential customer coalitions and generally provides an efficiency based motivation for a government ban on price discrimination

two part pricing with costly arbitrage this paper considers the optimal two part pricing strategy of a monopolist whose customers collude when they purchase the firm s product in contrast to the sentiment in the existing price discrimination literature i find that a monopolist s profit can actually increase when consumers share its good when transaction costs for collusion are zero the firm can extract the full consumer surplus through two part prices when transaction costs are positive or there are a substantial number of consumers without access to resale the firm may be hurt by arbitrage

determining the production order of two seasonal products under capacity constraint abstract in this paper the production sequence of two seasonal products is analyzed when the parameters of demand forecasts are not certainly known in advance the accuracy of these forecasts improves as the season is approached however the expected demand remains a probability variable when production decisions are made on the production order and volume of the products at the beginning of the planning horizon the novel side of the approach applied in this paper is a capacity constraint inserted into the analyses in which the production volume depends on a probability variable namely on the expected demand

contracts under wage compression a case of beneficial collusion this paper considers a principal agent model with adverse selection and limited wage discrimination under wage compression an agent may have an incentive to free ride on other agents by manipulating his private information when collusion among the agents is not possible the principal distorts the output schedule to reduce information rent associated with the free riding opportunity under collusion however the principal can reduce the information rent by inducing side contracts among the agents thus partly removing the distortion in the output schedule we show that side contracts among the agents take place in equilibrium and that the prospect of collusion is beneficial

production planning of style goods with high setup costs and forecast revisions in this paper we study a problem common to a wide variety of manufacturing companies of determining the production schedule of style goods such as clothing and consumer durables under capacity constraints demand for items is stochastic and occurs in the last season of the planning horizon demand estimates are revised in each period we exploit the problem s two level hierarchical structure which is characterized by families and items production changeover costs from one family to another are high compared to other costs however changeover costs between items in the same family are negligible we first formulate this problem as a difficult to solve stochastic mixed integer programming problem then exploiting the problem s hierarchical structure we formulate a deterministic mixed integer programming problem and solve it by means of an algorithm that provides an approximate solution a lower bound is obtained by applying generalized linear programming to the approximate problem we illustrate the procedure using the disguised data of a consumer electronics company the computational results demonstrate the effectiveness of the proposed approach in a practical setting

the distribution free newsboy problem extensions to the shortage penalty case abstract in the classical newsboy problem no cost is assumed if the ordered quantity is less than the demand however in reality failure to meet demand is always associated with a penalty the aim of this work is to extend the analysis of the distribution free newsboy problem to the case when shortage cost is taken into consideration the analysis is based on the assumption that only the mean and variance of demand are known but its particular probability distribution is not a model is presented for determining both an optimal order quantity and a lower bound on the profit under the worst possible distribution of the demand the following cases are considered the single product case the fixed ordering cost case the random yield case and the resource constrained multi product case

the distribution free newsboy problem with resalable returns we study the case of a catalogue internet mail order retailer selling style goods and receiving large numbers of commercial returns returned products arriving before the end of the selling season can be resold if there is sufficient demand a single order is placed before the season starts excess inventory at the end of the season is salvaged and all demands not met directly are lost since little historical information is available it is impossible to determine the shape of the distribution of demand therefore we analyze the distribution free newsboy problem with returns in which only the mean and variance of demand are assumed to be known we derive a simple closed form expression for the distribution free order quantity which we compare to the optimal order quantities when gross demand is assumed to be normal lognormal or uniform we find that the distribution free order rule performs well when the coefficient of variation cv is at most 0 5 but is far from optimal when the cv is large

a simulation framework for forecasting uncertain lumpy demand abstract managing uncertainty when the demand is irregular and sporadic i e lumpy is a complex issue as well as an unexplored one this study analyses the behaviour of forecasting techniques when dealing with lumpy demand at the master production scheduling level in particular three forecasting techniques exponentially weighted moving average early sales and order overplanning are considered it is argued that demand lumpiness is a multidimensional phenomenon generated by different market characteristics namely numerousness of customers heterogeneity of customers frequency of order placing variety of each customer s request and correlation between customers behaviour hence the performances of the three forecasting methods are compared through simulation experiments with different values of the sources of lumpiness a framework is then proposed that indicates the domain of applicability of each forecasting technique according to the prevailing source of lumpiness in the market

a stochastic sequencing problem for style goods with forecast revisions and hierarchical structure this paper addresses the problem of simultaneously determining a production sequence and production volumes of style goods style goods have one selling season per year during the rest of the year manufacturers of style goods build up the inventory while continuously reestimating the demand in the final selling season in this problem products have a two stage hierarchy items and families the production of a family is assumed to be nonpreemptive exploiting the hierarchical structure we formulate the problem as a two stage stochastic sequencing problem the stochastic aggregate sequencing problem and the stochastic disaggregation problem to solve the stochastic aggregate sequencing problem a simple heuristic solution procedure is developed that accounts for the forecast revisions and provides a lower bound on the optimal value the heuristic is tested using the disguised data obtained from a consumer electronics company the computational results demonstrate the applicability of the proposed procedure

household unemployment and the labour supply of married women a recent reform to the uk unemployment insurance ui system has reduced the duration of entitlement from 12 to six months the ui and welfare systems interact in the uk in such a way that exhaustion of ut for married individuals has potentially large disincentive effects on the labour supply of spouses a model of labour supply is estimated for married women allowing for endogenous unemployment durations of husbands and wives we distinguish between transfer programme induced incentive effects correlation between labour supply and wages within couples complementarity between the leisure times of spouses and a discouraged worker effect

multi level approaches to demand management in complex environments an analytical model abstract recent studies have shown that as demand becomes irregular and complex i e lumpy a possible approach for managing such uncertainty is to collect information directly from customers this implies that the sales units have to move closer to customers analyse their likely requirements and collect quantitative and structured data as well as qualitative and subjective insights however as integration with individual customers increases and data collection capabilities improve the organisational configuration of most companies becomes ever more complex and the aggregation of forecasts more difficult this paper discusses two approaches to managing demand uncertainty in complex environments in the first termed decentralised order overplanning sales units are responsible for forecasting the demand of each customer and defining requirements in the second termed centralised order overplanning forecasts provided by sales units are aggregated and further elaborated by manufacturing to define item requirements by means of an analytical model which describes the forecasting and planning process as a bayesian markovian process we show that the centralised method out performs the decentralised approach by virtue of the ability to exploit the additional information provided by commonalities between customers requests however this advantage has to be balanced against organisational costs since the centralised method splits responsibilities for forecasting and slack control between sales and manufacturing units major conflicts are likely to arise the focus and commitment on forecasting accuracy may be compromised and information may be lost when individual forecasts are sent to the manufacturing unit