Centralization of stocks: retailers vs. manufacturer

Article Abstract:

A model with two retailers and one manufacturer is developed to examine whether how physical centralization of stocks in a system with multiple retailers affects the manufacturer. This analysis considers two systems, one where the retailers keep stocks separately and one where they choose to centralize stocks at one facility. The investigation demonstrates that the level of market search in the supply chain influences how centralization increases manufacturer profits. Market search refers to the willingness of customers to seek the good at other retailers if it is not available at their own retailer and buy the good at these other locations that hold them. This analysis reveals a threshold level for market search above which the manufacturer and sometimes even the whole system is disadvantaged. Finally, it is found that a manufacturer benefits more in a decentralized system with high market search than in a centralized system with high market search.

MISCELLANEOUS MANUFACTURING INDUSTRIES, Manufacturing NEC, All Other Miscellaneous Manufacturing, Miscellaneous Store Retailers, MISCELLANEOUS RETAIL, Retail Trade NEC, Inventory Control, Manufacturing industry, Manufacturing industries, Retail industry, Retail trade, Logistics

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The finite horizon nonstationary stochastic inventory problem: near-myopic bounds, heuristics, testing

Article Abstract:

The restocking of inventories in a periodic manner when demands are stochastic is a common situation in a number of industrial settings. Usually, such a problem can be approached by assuming that the demands are distributed identically across periods. This approach, however, has limited value when demand patterns are heavily influenced by seasonal fluctuations. In such instances, a nonstationary stochastic inventory model would be more applicable. The nonstationary models that can be used for settings with seasonal patterns fall into several categories depending on the ordering cost assumption used, as well as the proportionate penalty and holding costs involved, proportionate salvage revenues at the horizon's end, the backlogging of demand, the independent period-to-period demand and zero-lag order delivery.

Research, Seasonal industries

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The nonstationary stochastic lead-time inventory problem: near-myopic bounds, heuristics, and testing

Article Abstract:

The works of Kaplan (1970), Ehrhardt (1984) and Morton and Pentico (1991) on the finite horizon stochastic leadtime problem are combined to formulate near-myopic bounds and heuristics for such a problem with random sequences of demand distributions. The present analysis also seeks to generate planning horizon results. Ehrdhardt's work is an extension of Kaplan's and shows that it is possible to turn the latter's stochastic leadtime inventory problem into an equivalent zero leadtime problem without effecting any change in the expected ordering, holding and penalty costs. Morton and Pentico's work assumes zero lag and generates upper and lower near-myopic bounds for the finite zero leadtime nonstationary problem. The results of the present analysis show that the problem has a simple near-myopic structure.

Testing, Stochastic processes, Heuristic, Heuristics (Psychology)

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