SLOTTING ALLOWANCES, FAILURE FEES AND ASYMMETRIC INFORMATION IN THE GROCERY SUPPLY CHAIN

Marketing,

Mixed contracts for the newsvendor problem with real options

In this paper we consider the newsvendor model with real options. We consider a mixed contract where the retailer can order a combination of q units subject to the conditions in a classical newsvendor contract and Q real options on the same items. We provide a closed form solution to this mixed contract when the demand is discrete and study some of its properties. We also offer an explicit solution for the continuous case. In particular we demonstrate that a mixed contract may be superior to a real option contract when a manufacturer has a bound on how much variance she is willing to accept.Newsvendor model; real options; discrete demand; mixed contract

Study on Buyback Contract in Supply Chain With a Loss-Averse Supplier and Multiple Loss-Averse Retailers Under Stockout Loss Situation

According to the prospect theory and the loss-aversion function, this paper developers the buyback contract model in a two-stage supply chain with a loss-averse supplier and multiple loss-averse retailers. Under the stockout loss setting, we analyze the effect of the loss aversion on the behavior from the retailers and the supplier, and then the buyback contract has been shown to be able to coordinate the supply chain. Furthermore, the number of retailers and loss aversion coefficient meet a certain range, there will be a unique optimal buyback price to achieve supply chain coordination

Multistage Stochastic Portfolio Optimisation in Deregulated Electricity Markets Using Linear Decision Rules

The deregulation of electricity markets increases the financial risk faced by retailers who procure electric energy on the spot market to meet their customers’ electricity demand. To hedge against this exposure, retailers often hold a portfolio of electricity derivative contracts. In this paper, we propose a multistage stochastic mean-variance optimisation model for the management of such a portfolio. To reduce computational complexity, we perform two approximations: stage-aggregation and linear decision rules (LDR). The LDR approach consists of restricting the set of decision rules to those affine in the history of the random parameters. When applied to mean-variance optimisation models, it leads to convex quadratic programs. Since their size grows typically only polynomially with the number of periods, they can be efficiently solved. Our numerical experiments illustrate the value of adaptivity inherent in the LDR method and its potential for enabling scalability to problems with many periods.OR in energy, electricity portfolio management, stochastic programming, risk management, linear decision rules

Coordinating a Supply Chain with Risk-Averse Agents under Demand and Consumer Returns Uncertainty

This paper examines the optimal order decision in a supply chain when it faces uncertain demand and uncertain consumer returns. We build consumer returns model with decision-makers’ risk preference under mean-variance objective framework and discuss supply chain coordination problem under wholesale-price-only policy and the manufacturer’s buyback policy, respectively. We find that, with wholesale price policy, the supply chain cannot be coordinated whether the supply chain agents are risk-neutral or risk-averse. However, with buyback policy, the supply chain can be coordinated and the profit of the supply chain can be arbitrarily allocated between the manufacturer and the retailer. Through numerical examples, we illustrate the impact of stochastic consumer returns and the supply chain agents’ risk attitude on the optimal order decision

The Newsvendor Problem: Review and Directions for Future Research

In this paper, we review the contributions to date for analyzing the newsvendor problem. Our focus is on examining the specific extensions for analyzing this problem in the context of modeling customer demand, supplier costs, and the buyer risk profile. More specifically, we analyze the impact of market price, marketing effort, and stocking quantity on customer demand; how supplier prices can serve as a coordination mechanism in a supply chain setting; integrating alternative supplier pricing policies within the newsvendor framework; and how the buyer’s risk profile moderates the newsvendor order quantity decision. For each of these areas,we summarize the current literature and develop extensions. Finally, we also propose directions for future research

Service Operations Optimization: Recent Development in Supply Chain Management

Services are the key of success in operation management. Designing the effective strategies by optimization techniques is the fundamental and important condition for performance increase in service operations (SOs) management. In this paper, we mainly focus on investigating SOs optimization in the areas of supply chain management, which create the greatest business values. Specifically, we study the recent development of SOs optimization associated with supply chain by categorizing them into four different industries (i.e., e-commerce industry, consumer service industry, public sector, and fashion industry) and four various SOs features (i.e., advertising, channel coordination, pricing, and inventory). Moreover, we conduct the technical review on the stylish industries/topics and typical optimization models. The classical optimization approaches for SOs management in supply chain are presented. The managerial implications of SOs in supply chain are discussed