Stalking information: Bayesian inventory management with unobserved lost sales
Article Abstract:
A study was conducted to analyze an empirical Bayesian inventory problem wherein unmet demand is both lost and unobserved. The full Bayesian problem was solved by scaling solutions to a simple problem that can be examined before the product is stocked. The stock level for a given period was obtained by rescaling the value from the normalized problem using the best estimate of the size of the market. It was assumed that the cost parameters were stationary over time and that the underlying demand process supported independent and identically distributed demands over time. Results indicated that size and precision effects support critical functions in stalking information. Findings also showed that when the stockout penalty is sufficiently small, the product will be profitable regardless of the sequence of observed sales.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1999
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Capacity choice and allocation: strategic behavior and supply chain performance
Article Abstract:
A model depicting retailer ordering behavior and its effect on the supply chain suggests that the benefits gained by the supply chain when retailers place their optimal order rather than an inflated one should be compared to the cost of inducing retailers to tell the truth. Telling the truth improves the performance of the supply chain in terms of the allocation of output among retailers but can be obstacles in building up and utilizing the capacity of the system. In fact, destructive and irrational behavior such as inflating orders to receive a better allotment of stock can even lead to performance gains for the supply chain. The model also shows that using a truth inducing mechanism can actually have detrimental effects on the supplier, the supply chain and the retailers.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1999
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Capacity allocation using past sales: when to turn-and-earn
Article Abstract:
A study was conducted to consider the scenario of a supply chain where one supplier sells to multiple retailers but total retailer orders surpasses the fixed capacity of the supplier. It is assumed that the supplier must use some type of allocation method to balance supply and demand. The study analyzes the manner in which the choice of allocation scheme influences supply chain performance and the profits of the individual players. A stylized model is used to demonstrate that although retailers may not compete for customers, a mechanism commonly used in the automobile industry called the turn-and-earn allocation induces them compete for scarce capacity. Under this method, better allocation is secured by increasing existing sales.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1999
User Contributions:
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