make to order or make to stock model and application some firms make all their products to order while others make them to stock there are a number of firms that maintain a middle ground where some items are made to stock and others are made to order this paper was motivated by a consumer product company faced with the decision about which items to make to stock and which ones to make to order and the inventory and production policy for the make to stock items the production environment is characterized by multiple items setup times between the production of consecutive items limited capacity and congestion effects in such an environment making an item to order reduces inventory costs for that item but might increase the lot size and inventory costs for the items made to stock also lead times increase because of congestion effects resulting in higher safety stocks for make to stock items and lower service levels for make to order items thus leading to a complex trade off we develop a nonlinear integer programming formulation of the problem we present an efficient heuristic to solve the problem which was motivated by key results for a special case of the problem without congestion effects that can be solved optimally we also develop a lower bound to evaluate the performance of the heuristic a computational study indicates that the heuristic performs well we discuss the application of the model in a large firm and the resulting insights we also provide insights into the impact of various problem parameters on the make to order versus make to stock decisions using a computational study in particular we find that the average number of setups of an item selected for make to stock production is always less than half the average number of setups of the item if it were to be made to order also factors other than an item s demand such as its setup time processing time and unit holding cost impact the make to order versus make to stock decision

virtual progress the effect of path characteristics on perceptions of progress and choice in goal oriented services consumers want to get transported from one well defined state start to another destination state without much concern for intermediate states a cost based evaluation of such services should depend on the total cost associated with the service i e the price and the amount of time taken for completion in this paper we demonstrate that the characteristics of the path to the final destination also influence evaluation and choice specifically we show that segments of idle time and travel away from the final destination are seen as obstacles in the progress towards the destination and hence lower the choice likelihood of the path further we show that the earlier such obstacles occur during the service the lower is the choice likelihood we present an analytical model of consumer choice and test its predictions in a series of experiments our results show that in choosing between two services that cover the same displacement in the same time i e identical average progress consumer choice is driven by the perception of progress towards the goal i e byvirtual progress in a final experiment we show that the effects of virtual progress may outweigh the effects of actual average progress

productivity growth catching up and uncertainty in china s meat trade abstract the potential role of china as a major importer of agricultural products and the likely impact on world markets has been a topic of considerable debate over the past decade in this paper we focus specifically on the livestock sector and develop a detailed analysis of productivity growth in china s pig and poultry production along with projections of china s likely meat trade in the year 2010 we use a general equilibrium model which permits us to explore the sensitivity of our projections to macro economic uncertainty as well as uncertainty in livestock productivity growth rates our analysis shows that china s net trade position is very sensitive to both of these factors with high livestock productivity growth and a slow down in the rest of the economy china could be a substantial competitor in export markets by 2010 on the other hand slow productivity growth in livestock production coupled with a rapidly growing macro economy could transform china into a major market for future meat exports

integrated multi item production inventory systems abstract we study an integrated multi item production inventory system with stochastic demands and capacitated production the problem is to find the base stock levels which minimize expected inventory costs per unit time for an infinite time horizon when unit manufacturing times are deterministic or exponentially distributed we derive analytical expressions that lead to the optimal base stock levels our results provide several implications about the interaction of inventories capacity utilization and variation in the production environment

understanding the determinants of structural change in world food markets american journal of agricultural economics 80 december 1052 1062 this study assesses the interaction between climate change and agricultural trade policies we distinguish between two dimensions of agricultural trade policy market insulation and subsidy levels building on the previous work of tsigas frisvold and kuhn 1997 we find that in the presence of current levels of agricultural subsidies increased price transmission as called for under the uruguay round agreement on agriculture reduces global welfare in the wake of climate change this is due to the positive correlation between productivity changes and current levels of agricultural support increases in subsidized output under climate change tend to exacerbate inefficiencies in the global agricultural economy in the absence of market insulation however once agricultural subsidies have also been eliminated price transmission via the global trading system contributes positively to economic adaptation under climate change products this may partially explain the relatively slow growth of world grain import demand in recent years in addition bilateral agreements with east asia nafta and the evolution of the cap have all had important impacts on the structure of world food and agricultural trade the objective of this paper is to assess the relative role of each of the major forces consumer demand factor accumulation transport costs and policy change in driving changes in the composition of world food trade in 1980 1995 to do so we employ a modified version of the global trade analysis project gtap model of world trade which permits us to isolate the contribution of each of these related factors to the changing composition of world food trade in a general equilibrium context we evaluate the relative role of each of these factors by simulating the model backwards in time from 1995 to 1980 under different assumptions this general approach termed backcasting i e backwards forecasting takes as exogenous the basic drivers of change and attempts to explain the resulting change in food trade composition the model produced changes in the composition of agricultural and food trade are compared with historical trade data to determine the relative importance of each factor on the changing composition of food trade given limited space our focus will be on explaining the changes in the global composition of food and agriculture trade a natural follow on effort would target specific markets in more detail this type of backcasting approach was first employed by gehlhar 1997 who sought to explain the shift in exports of primary commodities to manufactures in east asia in the 1980 s he calibrated the gtap model to 1992 data then implemented shocks to factor endowments and economywide total factor productivity tfp in order to force each economy back to its 1982 levels of population land labor human capital physical capital and technology by comparing actual and predicted changes in export shares in this period he found human capital accumulation played a key role in explaining the change in the aggregate composition of east asian exports gehlhar hertel and martin 1994 built on this work in an effort to predict future changes in the pattern of agricultural trade from 1992 2002 they also emphasized the importance of supply side determinants of agricultural trade in this paper we go beyond this earlier work in a number of ways first we focus on the composition of agricultural exports rather than simply looking at the share of agriculture in total trade secondly we incorporate the cranfield et al estimates of rimmer and powell s recently developed implicitly directly additive demand system nicknamed aidads into the gtap model this permits us to better capture the impact of demand side changes on the pattern of global tr

optimal dynamic scheduling policy for a make to stock production system this paper considers the dynamic scheduling problem of a single server make to stock queue with two products for the case of poisson demands and exponential production times we show that it is optimal to produce the product with the larger b index when it is backordered if the production times are identically distributed the optimal policy can further be characterized by monotone switching curves we also prove that a base stock policy coupled with a switching curve is optimal for some initial inventory levels a simple linear switching rule for determining production priority is proposed and compared with other heuristic policies in a computational experiment

tax aversion in labor supply abstract in a real effort laboratory experiment labor supply decreases more with the introduction of a tax than with a financially equivalent drop in wages this tax aversion is large in magnitude when we decompose the productivity decrease that arises from taxation we estimate that 40 is due to the lower net wage and the remaining 60 to tax aversion this tax aversion affects labor supply more on the extensive margin working less than on the intensive margin being less productive while working the aversion is equally strong whether tax revenue goes to the u s government or back to the experimenter a laboratory tax we discuss the implications of our results for the relationship between labor supply and taxation

economic growth and the changing structure of trade and production in the pacific rim growth have been in the range of 6 7 young during this period production and trade patterns in the pacific basin have undergone profound structural changes in the last two decades south korea has moved from the production of labor intensive manufactures to more capital and skill intensive sectors thailand traditionally an exporter of natural resource based commodities showed a sharp fall in its export share of agriculture and a sharp rise in the share of manufactures such as textiles and simple electronics gehlhar in contrast while the importance of agriculture in total north american output has fallen its share in exports has remained stable in recent years as export volumes continue to increase the growth of total east asian exports naturally coincides with rapid import growth in order to expand their manufacturing capacity east asian countries have imported massive amounts of capital equipment but expansion of the manufacturing sector also pulls labor away from agriculture at the very time income growth is leading to increased per capita food demands therefore we have seen a strong rise in the demand for farm and food imports in east asia indeed during the 1980s this region emerged as the fastest growing market for agricultural commodities accounting for the bulk of the increase in u s exports usda 1993a

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

the labor illusion how operational transparency increases perceived value aubiquitous feature of even the fastest self service technology transactions is the wait conventional wisdom and operations theory suggest that the longer people wait the less satisfied they become we demonstrate that because of what we term the labor illusion when websites engage in operational transparency by signaling that they are exerting effort people can actually prefer websites with longer waits to those that return instantaneous results even when those results are identical in five experiments that simulate service experiences in the domains of online travel and online dating we demonstrate the impact of the labor illusion on service value perceptions demonstrate that perceptions of service provider effort induce feelings of reciprocity that together mediate the link between operational transparency and increased valuation and explore boundary conditions and alternative explanations this paper was accepted by pradeep chintagunta and preyas desai special issue editors this paper was accepted by pradeep chintagunta and preyas desai special issue editors

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

giving firms an e for effort consumer responses to high effort firms this research shows that consumers reward firms for extra effort more specifically a series of three laboratory experiments shows that when firms exert extra effort in making or displaying their products consumers reward them by increasing their willingness to pay store choice and overall evaluations even if the actual quality of the products is not improved this rewarding process is defined broadly as general reciprocity consistent with attribution theory the rewarding of generally directed effort is mediated by feelings of gratitude when consumers infer that effort is motivated by persuasion however they no longer feel gratitude and do not reward high effort firms

stock wars inventory competition in a two echelon supply chain with multiple retailers this paper studies the competitive and cooperative selection of inventory policies in a two echelon supply chain with one supplier andn retailers stochastic demand is monitored continuously retailers incur inventory holding and backorder penalty costs the supplier incurs holding costs for its inventory and backorder penalty costs for backorders at the retailers the latter cost reflects the supplier s desire to maintain adequate availability of its product to consumers previous research finds the supply chain cost minimizing reorder point policies the cooperative solution the competitive solution is a nash equilibrium a set of reorder points such that no firm can deviate from the equilibrium and lower its cost it is shown that nash equilibria exist and a method is presented to find all of them in some settings the cooperative solution is a nash equilibrium competition does not necessarily lead to supply chain inefficiency in other settings competition leads to costs that are substantially higher than optimal usually but not always the competitive supply chain carries too little inventory three cooperation strategies are discussed change incentives change equilibrium and change control a set of contracts is provided that changes the firms incentives so that the optimal policy is a nash equilibrium an equilibrium change can improve performance but does not guarantee optimal performance to change control the firms let the supplier choose all reorder points a key component in vendor managed inventory that change leads to optimal supply chain performance

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

on why agriculture declines with economic growth abstract when economic growth is characterised by a slow rise in the demand for food and rapid growth in farm relative to non farm productivity it is understandable that agriculture in a closed economy declines in relative terms as that economy develops but why should agriculture decline in virtually all open growing economies as well including those able to retain a comparative advantage in agricultural products a key part of the answer is that the demand for non tradable goods tends to be income elastic so resources are diverted to their production even in open economies

cultivating trust and harvesting value in virtual communities although previous scholars have examined the value of virtual communities to customers in this study we investigate the role of a firm s efforts in cultivating trust and harvesting value for themselves via the virtual communities that they sponsor we hypothesize that the perceptions of a firm s efforts to provide quality content to foster member embeddedness and to encourage interaction foster favorable customer beliefs about and trust in a virtual community sponsor further we hypothesize that trust motivates customers to behave relationally toward the sponsoring firm by sharing information with coproducing new products with and granting loyalty to the sponsoring firm data from 663 customers are analyzed using structural equation modeling techniques we find that efforts to provide quality content and foster member embeddedness have positive effects on customer beliefs about the sponsor in fact fostering member embeddedness has a stronger explanatory effect on customer beliefs than does providing quality content however despite the fact that previous studies show that customers value interaction in virtual communities our findings suggest that firms must do more than encourage interaction among their community members if they hope to create value from their virtual communities

volatility impulse response functions for multivariate garch models an exchange rate illustration we introduce a new concept of impulse response functions tracing the effects of independent shocks on volatility through time while avoiding typical orthogonalization and ordering problems in an empirical study of a bivariate foreign exchange fx rate series we use volatility impulse response functions to discuss the effects of central bank decisions such as direct interventions in the fx market or open market activities on fx market volatility comparing our concept with conditional moment profiles introduced by gallant et al gallant a r rossi p e tauchen g 1993 nonlinear dynamic structures econometrica 61 871 907 we show that for shocks affecting fx rates in an asymmetric way the difference between the two methodologies and their interpretation can be substantial

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

modeling loss aversion and reference dependence effects on brand choice based upon a recently developed multiattribute generalization of prospect theory s value function tversky and kahneman 1991 we argue that consumer choice is influenced by the position of brands relative to multiattribute reference points and that consumers weigh losses from a reference point more than equivalent sized gains loss aversion we sketch implications of this model for understanding brand choice we develop a multinomial logit formulation of a reference dependent choice model calibrating it using scanner data in addition to providing better fit in both estimation and forecast periods than a standard multinomial logit model the model s coefficients demonstrate significant loss aversion as hypothesized we also discuss the implications of a reference dependent view of consumer choice for modeling brand choice demonstrate that loss aversion can account for asymmetric responses to changes in product characteristics and examine other implications for competitive strategy

competition and outsourcing with scale economies scale economies are commonplace in operations yet because of analytical challenges relatively little is known about how firms should compete in their presence this paper presents a model of competition between two firms that face scale economies i e each firm s cost per unit of demand is decreasing in demand a general framework is used which incorporates competition between two service providers with price and time sensitive demand a queuing game and competition between two retailers with fixed ordering costs and pricesensitive consumers an economic order quantity game reasonably general conditions are provided under which there exists at most one equilibrium with both firms participating in the market we demonstrate in the context of the queuing game that the lower cost firm in equilibrium may have a higher market share and a higher price an enviable situation we also allow each firm to outsource their production process to a supplier even if the supplier s technology is no better than the firms technology and the supplier is required to establish dedicated capacity so the supplier s scale can be no greater than either firm s scale we show that the firms strictly prefer to outsource we conclude that scale economies provide a strong motivation for outsourcing that has not previously been identified in the literature

coordinating investment production and subcontracting we value the option of subcontracting to improve financial performance and system coordination by analyzing a competitive stochastic investment game with recourse the manufacturer and subcontractor decide separately on their capacity investment levels then demand uncertainty is resolved and both parties have the option to subcontract when deciding on their production and sales we analyze and present outsourcing conditions for three contract types 1 price only contracts where an ex ante transfer price is set for each unit supplied by the subcontractor 2 incomplete contracts where both parties negotiate over the subcontracting transfer and 3 state dependent price only and incomplete contracts for which we show an equivalence result while subcontracting with these three contract types can coordinate production decisions in the supply system only state dependent contracts can eliminate all decentralization costs and coordinate capacity investment decisions the minimally sufficient price only contract that coordinates our supply chain specifies transfer prices for a small number 6 in our model of contingent scenarios our game theoretic model allows the analysis of the role of transfer prices and of the bargaining power of buyer and supplier we find that sometimes firms may be better off leaving some contract parameters unspecified ex ante and agreeing to negotiate ex post also a price focused strategy for managing subcontractors can backfire because a lower transfer price may decrease the manufacturer s profit finally as with financial options the option value of subcontracting increases as markets are more volatile or more negatively correlated

incentive effects favor nonconsolidating queues in a service system the principal agent perspective in this paper we study a service network in which an agency is responsible for satisfying a constraint on the expected waiting and service time experienced by customers however the agency does not render the actual service instead it serves to coordinate independently operated facilities the coordinating agency must devise a strategy for allocating compensation and customers to the self interested operators in order to minimize its own costs for a network of two facilities we model the facilities self interested capacity decisions as the solution to a game using this analytical framework we compare two types of customer allocation one from a common queue and one from separate queues our analysis shows that it can be in the best interest of the coordinating agency to adopt a separate queue allocation scheme instead of one based on a common queue although doing so sacrifices risk pooling benefits these can be more than offset by the stronger incentives that are created for the independent facilities

the fewer the better number of goals and savings behavior abstract this article examines the effect of the number of goals on consumers savings behavior drawing from research on implementation intention the authors show that under certain conditions presenting a single savings goal leads to greater savings intention and actual savings than presenting multiple savings goals multiple goals typically evoke trade offs among competing goals and thus increase the likelihood that people will remain in a deliberative mind set and defer actions in contrast the authors propose and demonstrate that a single goal evokes a stronger implementation intention which in turn has a greater effect on behavior change they also show that the advantage of a single goal over multiple goals on saving is attenuated when saving is easier to implement or when the multiple savings goals are integrated rather than competing among themselves theoretical and practical implications are discussed

setting customer expectation in service delivery an integrated marketing operations perspective service firms have increasingly been competing for market share on the basis of delivery time many firms now choose to set customer expectation by announcing their maximal delivery time customers will be satisfied if their perceived delivery times are shorter than their expectations this gap model of service quality is used in this paper to study how a firm might choose a delivery time commitment to influence its customer expectation and delivery quality in order to maximize its market share a market share model is developed to capture 1 the impact of delivery time commitment and delivery quality on the firm s market share and 2 the impact of the firm s market share and process variability on delivery quality when there is a congestion effect we show that the choice of the delivery time commitment requires a proper balance between the level of service capacity and customer sensitivities to delivery time expectation and delivery quality we prove the existence of nash equilibria in a duopolistic competition and show that this delivery time commitment game is analogous to a prisoners dilemma

explaining the time varying effects of oil market shocks on us stock returns abstract this paper documents time variation in the relation between oil price and us equity returns based on both reduced form and structural analyses our reduced form analysis suggests that the sign of the relation between real oil returns and real stock returns has changed over time and that in the recent period this relation has turned positive since early 2007 but started increasing since 2005 based on our structural analysis we find that oil specific demand shocks have had positive effects on the us stock market since 2009 as opposed to oil supply shocks which have no large effects on stock returns we also show that the time variation in the parameters of the structural var is very well explained by the level of the us short term interest rate and shifts in consumer confidence

competitive and cooperative inventory policies in a two stage supply chain we investigate a two stage serial supply chain with stationary stochastic demand and fixed transportation times inventory holding costs are charged at each stage and each stage may incur a consumer backorder penalty cost e g the upper stage the supplier may dislike backorders at the lower stage the retailer we consider two games in both the stages independently choose base stock policies to minimize their costs the games differ in how the firms track their inventory levels in one the firms are committed to tracking echelon inventory in the other they track local inventory we compare the policies chosen under this competitive regime to those selected to minimize total supply chain costs i e the optimal solution we show that the games nearly always have a unique nash equilibrium and it differs from the optimal solution hence competition reduces efficiency furthermore the two games equilibria are different so the tracking method influences strategic behavior we show that the system optimal solution can be achieved as a nash equilibrium using simple linear transfer payments the value of cooperation is context specific in some settings competition increases total cost by only a fraction of a percent whereas in other settings the cost increase is enormous we also discuss stackelberg equilibria

revenue management approach to stochastic capacity allocation problem abstract to formulate stochastic capacity allocation problems in a manufacturing system the concept and techniques of revenue management is applied in this research it is assumed the production capacity is stochastic and hence its exact size cannot be forecasted in advance at the time of planning there are two classes of frequent and occasional customers demanding this capacity the price rate as well as the penalty for order cancellation caused by overbooking is different for each class the model is developed mathematically and we propose an analytical solution method the properties of the optimal solution as well as the behavior of objective function are also analyzed the objective function is not concave in general however we prove it is a unimodal function and by taking advantage of this property the optimal solution is determined

economic growth and world food insecurity a parametric approach abstract this paper focuses on the feasibility of reducing the number of individuals that are food insecure to about 700 million by 2015 a sufficient statistic to characterize the level and distribution of income in 134 countries is developed and regressed on variables hypothesized to be its major determinants a global general equilibrium model is then calibrated to data and experiments performed that change the levels of these variables the results show that attaining the 700 million target is feasible but unlikely growth in economy wide total factor productivity agricultural factor productivity and labor productivity is analyzed

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

inventory dynamics and supply chain coordination this paper extends the theory of supply chain incentive contracts from the static newsvendor framework of the existing literature to the simplest dynamic setting a manufacturer distributes a product through retailers who compete on both price and fill rates we show that inventory durability is the key factor in determining the underlying nature of incentive distortions and their contractual resolutions when the product is highly perishable retailers are biased toward excessive price competition and inadequate inventories vertical price floors or inventory buybacks subsidies for unsold inventory can coordinate incentives in both pricing and inventory decisions when the product is less perishable the distortion is reversed and vertical price ceilings or inventory penalties can coordinate incentives

competition for procurement contracts with service guarantees we consider a market with two suppliers and a set of buyers in search of procurement contracts with one of the suppliers in particular each buyer needs to process a certain volume of work and each supplier s ability to process the customers requests is constrained by a production capacity the procurement contracts include guarantees that the products will be available when needed and the buyers select a supplier based on their service delivery offers the suppliers are modeled as make to stock queues and compete for the buyers business the main objective of this paper is to determine how the procurement contracts are established between buyers and suppliers because each buyer selects a single supplier to establish the sourcing relationship the game fails to have a pure strategy nash equilibrium instead an equilibrium is defined as the limit equilibrium of some discrete action games

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

pricing production scheduling and delivery time competition this paper studies competition between firms that produce goods or services for customers sensitive to delay time firms compete by setting prices and production rates for each type of customer and by choosing scheduling policies the existence of a competitive equilibrium is proved the competitive equilibrium is well defined whether or not a firm can differentiate between customers based upon physical characteristics because each customer has incentive to truthfully reveal its delay cost further insights are derived in two special cases a unique equilibrium exists for each of the cases in the first case firms are differentiated by cost mean processing time and processing time variability but customers are homogeneous the conclusions include that a faster lower variability and lower cost firm always has a larger market share higher capacity utilization and higher profits however this firm may have higher prices and faster delivery time or lower prices and longer delivery time in the second

modeling the role of retail price formats and retailer competition types on production schedule strategy abstract to study the determinants of choice between make to order mto and make to stock mts production scientists have traditionally focused on production specific factors however the choice can be also influenced by marketing specific factors such as the pricing strategy of retailers this paper therefore develops a modeling framework to link the determination of the optimal production strategy of mts mto to the retailing strategy of edlp hilo we characterize an optimal production strategy as one that maximizes total system wide profits in a centralized system we show that the optimum production strategy would depend on whether the manufacturer is delivering to an every day low pricing edlp store or to a high low pricing store hi lo additionally the production plan is demonstrated to be a function of the nature and type of competition in the market in particular we study the duopoly model of competition under both bertrand and stackelberg conjectures

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

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

inventory rationing in a make to stock production system with several demand classes and lost sales this paper considers the stock rationing problem of a single item make to stock production system with several demand classes and lost sales for the case of poisson demands and exponential production times we show that the optimal policy can be characterized by a sequence of monotone stock rationing levels for each demand class there exists a stock rationing level at or below which it is optimal to start rejecting the demand of this class in anticipation of future arrival of higher priority demands a simple queueing model is analyzed to compute the operating cost of a rationing policy in a numerical study we compare the optimal rationing policy with a first come first served policy to investigate the benefit of stock rationing under different operating conditions of the system

a supply chain network economic model with time based competition abstract this paper presents an integrated model for time cost competition between supply chains with heterogeneous customers the firms in our model can offer various time options for their production service to time sensitive customers this gives rise of a new concept of time based supply chain which we call t chain to be the basic element in the competition and extends the inter supply chain competition to a new dimension of time assuming the customers are heterogeneous in time cost bi criteria decision making we integrate the discrete choice theory into supply chain network competition and formulate the equilibrium conditions as a multinomial logit based variational inequality problem numerical examples are presented for model illustration and managerial insights such as profit maximization for a firm who participates in this supply chain network

oil price shocks and stock return volatility new evidence based on volatility impulse response analysis abstract we use volatility impulse response analysis to quantify the size and the persistence of different types of oil price shocks on oil and stock return volatility dynamics our results show that precautionary demand followed by aggregate demand side shocks compared to supply side ones have higher positive and persistent effects on stock return volatility whereas the covariances between the two variables are mostly affected by the former shocks

it s not what you get but when you get it the effect of gift sequence on deposit balances and customer sentiment in a commercial bank abstract the authors examine the impact of gifts on deposit balances and customer satisfaction in a longitudinal field experiment conducted at a commercial bank they find that gifts increased deposit balances survey response rates and customer satisfaction compared with the no gift control they manipulated several factors within the gift treatment gift type the accompanying message and the sequence of gift value which improved 35 then 100 gift worsened 100 then 35 gift or was a single gift a highly detrimental effect of decreasing gift value occurred on deposit balances this deterioration aversion persisted in a long term follow up analysis of deposit balances a vignette experiment replicates deterioration aversion and extends the results demonstrating increased effectiveness of improving gifts over constant gift sequences and indicating that the mechanism underlying deterioration aversion involves the violation of expectations

optimal service speeds in a competitive environment this is a study of the economic behavior of vendors of service in competition a simple model with two competing exponential servers and poisson arrivals is considered each server is free to choose his own service rate at a cost per time unit that is strictly convex and increasing there is a fixed reward to a server for each customer that he serves the model is designed to study one specific aspect of competition namely competition in speed of service as a means for capturing a larger market share in order to maximize long run expected profit per time unit a two person strategic game is formulated and its solutions are characterized depending on the revenue per customer served and on the cost of maintaining service rates the following three situations may arise i a unique symmetric strategic nash equilibrium in which expected waiting time is infinite ii a unique symmetric strategic equilibrium in which expected waiting time is finite and iii several nonsymmetric strategic equilibria with infinite expected waiting time an explicit expression for the market share of each server as a function of the service rates of the two servers is also given

procuring fast delivery sole sourcing with information asymmetry this paper studies a queuing model in which a buyer sources a good or service from a single supplier chosen from a pool of suppliers the buyer seeks to minimize the sum of her procurement and operating costs the latter of which depends on the suppliers lead time the selected supplier can regulate his lead time but faster lead times are costly although the buyer selects the supplier to source from possibly via an auction and dictates the contractual terms the buyers bargaining power is limited by asymmetric information the buyer only has an estimate of the suppliers costs while the suppliers know their costs precisely we identify a procurement mechanism that minimizes the buyers total cost procurement plus operating this mechanism is not simple it is a numerically derived nonlinear menu of contracts therefore we study several simpler mechanisms e g one that charges a late fee and one that specifies a fixed lead time requirement no menus no nonlinear functions we find that simple mechanisms are nearly optimal generally within 1 of optimal because asymmetric information conveys significant protection to the supplier i e the supplier is able to retain most of the benefit of having a lower cost renegotiation is another concern with the optimal mechanism because it does not minimize the supply chains cost the firms can be both better off if they throw away the contract and start over interestingly we find that the potential gain from renegotiation is relatively small with either the optimal or our simple mechanisms we conclude that our simple mechanisms are quite attractive along all relevant dimensions buyers performance supply chain performance simplicity and robustness to renegotiation

optimal operating policies for multiplant stochastic manufacturing systems in a changing environment this paper addresses the horizontal coordination between production units located in different countries within a supply chain in a changing environment the model incorporates 1 congestion and delay through uncertainties in demand and processing times 2 a changing production cost environment through uncertainty in an environmental state such as the exchange rate and 3 allowing production to stock the main contribution of the paper is to characterize the optimal production policy assuming no switchover cost as a barrier type control policy for a series of models for each plant there is a barrier function defined on the environmental state that gives the total worldwide stock level barrier this plant should be operated if and only if the stock level is below this barrier the authors also show that in a simple setting of two plants in different countries the barrier functions are not always monotone in the exchange rate even when the production costs are the authors present a condition under which the control barriers are shown to be monotone under this condition and with only two plants it is optimal to follow a primary secondary plant policy in which given a fixed environmental state it is optimal to operate both plants when stock is low only the primary plant when stock is moderate and neither when stock is high furthermore the roles of the plants switch as the environmental state passes through the equal production cost state in addition the firm seeks to carry the most stock as a hedge against future environmental state moves when one plant is significantly cheaper than the other the firm seeks to carry the least stock when both plants are equally costly to operate

adaptive behavior of impatient customers in tele queues theory and empirical support we address the modeling and analysis of abandonments from a queue that is invisible to its occupants such queues arise in remote service systems notably the internet and telephone call centers hence we refer to them as tele queues a basic premise of this paper is that customers adapt their patience modeled by an abandonment time distribution to their service expectations in particular to their anticipated waiting time we present empirical support for that hypothesis and propose an m m m based model that incorporates adaptive customer behavior in our model customer patience depends on the mean waiting time in the queue we characterize the resulting system equilibrium namely the operating point in steady state and establish its existence and uniqueness when changes in customer patience are bounded by the corresponding changes in their anticipated waiting time the feasibility of multiple system equilibria is illustrated when this condition is violated finally a dynamic learning model is proposed where customer expectations regarding their waiting time are formed through accumulated experience we demonstrate via simulation convergence to the theoretically anticipated equilibrium while addressing certain issues related to censored sampling that arise because of abandonments

promised delivery time and capacity games in time based competition we investigate firms competitive behaviors in industries where customers are sensitive to both promised delivery time pdt and quality of service qos measured by the on time delivery rate to study the competition in pdt at the marketing level we construct an oligopoly game with an external qos requirement we show that there exists a unique nash equilibrium and the equilibrium qos exhibits a switching surface structure with respect to capacities to study the competition in capacity at the strategic level we construct a two stage game in which the firms compete in terms of their capacities in stage 1 and in terms of pdt in stage 2 we show the existence of two different types of pure strategy equilibria and characterize them this study provides the following insights an index of time based competitive advantage itca and the first mover advantage determine the positions of the firms in time based competition either the well known prisoner s dilemma or off equilibrium behaviors due to different preferences for equilibria when multiple equilibria exist may lead the firms to overinvest in capacity but no one may gain a competitive advantage a uniform improvement in internal efficiency i e a uniform capacity cost reduction may harm everyone quality differentiation i e going beyond the qos benchmark plays a dual role in time based competition either helping a firm with a larger itca to compete more effectively or helping a firm possibly with a smaller itca to preempt competitors and protect its market advantage this paper was accepted by paul h zipkin operations and supply chain management

technical note an optimal policy for joint dynamic price and lead time quotation for a dynamic joint price and lead time quotation problem with a fairly general demand function we show that the policy consisting of a threshold and a reward maximizing lead time is optimal this policy offers some interesting managerial insights under this policy finding the exact optimal quotation can be accomplished by single variable policy iterations of unimodal value functions

revenue management of a make to stock queue motivated by recent electronic marketplaces we consider a single product make to stock manufacturing system that uses two alternative selling channels long term contracts and a spot market of electronic orders at time 0 the risk averse manufacturer selects the long term contract price at which point buyers choose one of the two channels the resulting long term contract demand is a deterministic fluid while the spot market demand is modeled as a stochastic renewal process an exponential reflected random walk model is used to model the spot market price which is correlated with the spot market demand process the manufacturer accepts or rejects each electronic order and long term contracts and accepted electronic orders are backordered if necessary the manufacturer s control problem is to select the optimal long term contract price as well as the optimal production i e busy idle and electronic order admission policies to maximize revenue minus inventory holding and backorder costs under heavy traffic conditions the problem is approximated by a diffusion control problem and analytical approximations are used to derive a policy that is simple and reasonably accurate and robust

inventory control with information about supply conditions this paper presents an inventory control model which includes a markovian model of the supply system as that system evolves over time so do the replenishment leadtimes the optimal policy has the same structure as in standard models but its parameters change dynamically to reflect current supply conditions in this setting contrary to conventional wisdom a longer leadtime does not necessarily imply more inventory the leadtime is important but so is a concept we call order coverage

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

do workers prefer increasing wage profiles we present survey data challenging the assumption implicit in analyses of labor supply that all else being equal workers prefer declining over increasing wage profiles we test several explanations for our results including that a there is something special about wages e g their association with productivity as opposed to other types of payments that induces the preference for increasing wages b utility depends not only on absolute levels of consumption but also on changes in consumption over time and c respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained

optimal operating policies in the presence of exchange rate variability we study the structure of the optimal policies for a firm operating plants in different countries the relative costs of production between the plants are assumed to vary over time due to economic and political factors such as exchange rates inflation taxes and tariffs based on the costs the firm can alter the quantity produced in each plant we determine the structure of the optimal policies for deciding when and by how much to alter the production quantities when the switch over costs are linear or step functions regardless of whether the variable production costs are concave or piece wise linear convex and regardless of whether the firm is supplying one or more markets the optimal policy is always a barrier policy the optimal barriers can be determined by using linear programming techniques and the optimal costs can be computed by solving a system of linear equations when the number of optimal barriers is two the optimal expected costs and the condition that determines the optimal barriers are explicitly derived

waiting time and decision making is time like money time is a resource as such consumers have to make decisions regarding their use of time in the purchase and consumption of goods and services using prospect theory and mental accounting as theoretical frameworks this article investigates whether consumers treat time like money when they make decisions in a series of studies we found that the value of consumers time is not constant but depends on contextual characteristics of the decision situation our results also suggest that in deterministic situations people make decisions involving time losses in a manner consistent with the convex loss function proposed by prospect theory however in decision making under conditions of risk people seem to make risk averse choices with respect to decisions in the domain of time in contrast to the risk seeking behavior often found with respect to decisions involving losses of money we discuss the nonfungibility of time as an explanation for the discrepancy between decisions involving time and those involving money

price delivery time guarantees and capacity selection this paper studies the impact of using delivery time guarantees as a competitive strategy in service industries where demands are sensitive to both price and delivery time we assume that delivery reliability is crucial and investment in capacity expansion is plausible in order to maintain a high probability of delivering the time guarantee a mathematical framework is proposed to understand the interrelations among pricing delivery time guarantee and capacity expansion decisions specifically an optimization model is developed to determine the joint optimal selection of these three important decision variables with an objective of maximizing the average net profit we characterize the optimal decisions and study their qualitative behaviors as various parameters change we further present a numerical example to illustrate how the results of our model can be used to provide useful managerial insights for selecting the best competing strategies for firms with different operating characteristics our model and results are also applicable to a make to order manufacturing environment

dynamic co movement between oil and stock markets in oil importing and oil exporting countries two types of wavelet analysis abstract this study explores the dynamic co movement between oil and six stock markets china india japan saudi arabia russia and canada by using two types of wavelet analysis wavelet multi scale decomposition and wavelet coherence the main empirical results are as follows 1 maximal overlap discrete wavelet transform analysis shows that there are feedback relationships between the price movement of oil and stock markets in all six countries in the wavelet based decomposition at the d4 d5 and d6 scales 2 the pairs of oil and stock returns show high overall co movement at the 16 to 128 week scale based on continuous wavelet transform analysis the wavelet coherence and phase plots show that the pairs of oil and oil importing stock market returns have high co movement for the period between 2007 and 2012 especially during the global financial crisis of 2008 in addition the wavelet coherence and phase plots show that the pairs of oil and oil exporting stock market returns have high co movement from 2007 to 2017 3 oil price returns lead the stock returns of saudi arabia russia and canada from 2007 to 2017 at the 16 to 128 week scale the stock prices are more influenced by oil prices in oil exporting countries than in oil importing countries this evidence implies that the economic structure of oil exporting countries depends strongly on crude oil production 4 from the results of the wavelet based granger causality test there is a lead lag causality linkage in which the oil price leads stock market indices from 27 to 30 weeks 189 210 days the implications of these findings are discussed