Inventory Model with Seasonal Demand: A Specific Application to Haute Couture

In the stochastic multiperiod inventory problem, a vast majority of the literature deals with demand volume uncertainty. Other dimensions of uncertainty have generally been overlooked. In this paper, we develop a newsboy formulation for the aggregate multiperiod inventory problem intended for products of short sales season and without replenishments. A distinguishing characteristic of our formulation is that it takes a time dimension of demand uncertainty into account. The proposed model is particularly suitable for applications in haute couture, i.e., high fashion industry. The model determines the time of switching primary sales effort from one season to the next as well as optimal order quantity for each season with the objective of maximizing expected profit over the planning horizon. We also derive the optimality conditions for the time of switching primary sales effort and order quantity. Furthermore, we show that if time uncertainty and volume uncertainty are independent, order quantity becomes the main decision over the interval of the primary selling season. Finally, we demonstrate that the results from the two-season case can be directly extended to the multi-season case and the limited resource multiple-item case

Coordination of Decentralized Supply Chains: A Literature Review

Due to the fact that the double margin exists in the decentralized supply chain, many papers focus on the coordination of decentralized supply chain. In this paper, we classify these papers into three parts according to the structure of supply chain. The first kind of supply chain consists of one upstream supplier and one downstream retailer. The second one consists of multiple suppliers and a single retailer. The last one refers to the supply chain with multiple suppliers and a single retailer. This paper can enable readers to get the knowledge of existing research on supply chain coordination. We also give some interesting future research concerning this topic

Improving promotional effectiveness through supplier-retailer collaboration

Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2007.Includes bibliographical references (leaves 60-61).In the consumer products industry, retail chains and manufacturers run promotions to maintain consumer and brand loyalty. The two major issues in planning and executing promotions are to accurately forecast demand and to control Out-of-Stock at the shelf. This thesis addresses both these issues. At the strategic level, "Collaborative, Planning, Forecasting and Replenishment" is used to define a process for two companies to collaboratively plan and execute promotions. At an operational level, the single period multi-item newsboy concept with a budget constraint is used to define an optimization model that helps determine the right budget and order quantities for products under a promotion at a targeted service level to improve profit or sales. The concept of Supply Contracts is researched to identify some ways that can be used to optimize the whole supply chain rather than just the retailer's. The value of optimal collaboration was confirmed in the results shown by the model. When optimizing the entire chain, the maximize profit optimization model achieved combined profit improvements of 37% as compared to an actual promotion.(cont.) When only the retailer profit was maximized, the optimization model resulted in 5.9% profit improvements for the retailer and 0.3% profit improvements for the supplier as compared to an actual promotion. Finally, the revenue maximization model showed that after a certain point, increasing the budget did not result in increased service levels. This research can also be applied to new product launches, seasonality of products as well as daily replenishments.by Gautam Kapur and Bin Liu.M.Eng.in Logistic

Buyback and return policies for a book publishing firm = Egy könyvkiadó vállalat visszavásárlási stratégiája

A dolgozat célja egy vállalati gyakorlatból származó eset elemzése. Egy könyvkiadót tekintünk. A kiadó kapcsolatban van kis- és nagykereskedőkkel, valamint a fogyasztók egy csoportjával is vannak kapcsolatai. A könyvkiadók projekt rendszerben működnek. A kiadó azzal a problémával szembesül, hogy hogyan ossza el egy frissen kiadott és nyomtatott könyv példányszámait a kis- és nagykereskedők között, valamint mekkora példányszámot tároljon maga a fogyasztók közvetlen kielégítésére. A kiadóról feltételezzük, hogy visszavásárlási szerződése van a kereskedőkkel. A könyv iránti kereslet nem ismert, de becsülhető. A kis- és nagykereskedők maximalizálják a nyereségüket. = The aim of the paper is to analyze a practical real world problem. A publishing house is given. The publishing firm has contacts to a number of wholesaler / retailer enterprises and direct contact to customers to satisfy the market demand. The book publishers work in a project industry. The publisher faces with the problem how to allocate the stocks of a given, newly published book to the wholesaler and retailer, and to hold some copies to satisfy the customers direct from the publisher. The publisher has a buyback option. The distribution of the demand is unknown, but it can be estimated. The wholesaler / retailer maximize the profits. The problem can be modeled as a one-warehouse and N-retailer supply chain with not identical demand distribution. The model can be transformed in a game theory problem. It is assumed that the demand distribution follows a Poisson distribution

Constructive solution methodologies to the capacitated newsvendor problem and surrogate extension

The newsvendor problem is a single-period stochastic model used to determine the order quantity of perishable product that maximizes/minimizes the profit/cost of the vendor under uncertain demand. The goal is to fmd an initial order quantity that can offset the impact of backlog or shortage caused by mismatch between the procurement amount and uncertain demand. If there are multiple products and substitution between them is feasible, overstocking and understocking can be further reduced and hence, the vendor\u27s overall profit is improved compared to the standard problem. When there are one or more resource constraints, such as budget, volume or weight, it becomes a constrained newsvendor problem. In the past few decades, many researchers have proposed solution methods to solve the newsvendor problem. The literature is first reviewed where the performance of each of existing model is examined and its contribution is reported. To add to these works, it is complemented through developing constructive solution methods and extending the existing published works by introducing the product substitution models which so far has not received sufficient attention despite its importance to supply chain management decisions. To illustrate this dissertation provides an easy-to-use approach that utilizes the known network flow problem or knapsack problem. Then, a polynomial in fashion algorithm is developed to solve it. Extensive numerical experiments are conducted to compare the performance of the proposed method and some existing ones. Results show that the proposed approach though approximates, yet, it simplifies the solution steps without sacrificing accuracy. Further, this dissertation addresses the important arena of product substitute models. These models deal with two perishable products, a primary product and a surrogate one. The primary product yields higher profit than the surrogate. If the demand of the primary exceeds the available quantity and there is excess amount of the surrogate, this excess quantity can be utilized to fulfill the shortage. The objective is to find the optimal lot sizes of both products, that minimize the total cost (alternatively, maximize the profit). Simulation is utilized to validate the developed model. Since the analytical solutions are difficult to obtain, Mathematical software is employed to find the optimal results. Numerical experiments are also conducted to analyze the behavior of the optimal results versus the governing parameters. The results show the contribution of surrogate approach to the overall performance of the policy. From a practical perspective, this dissertation introduces the applications of the proposed models and methods in different industries such as inventory management, grocery retailing, fashion sector and hotel reservation

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

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

Multi-item quick response system with budget constraint

Cataloged from PDF version of article.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. & 2012 Elsevier B.V. All rights reserved

Virtual transshipments and revenue-sharing contracts in supply chain management

This dissertation presents the use of virtual transshipments and revenue-sharing contracts for inventory control in a small scale supply chain. The main objective is to maximize the total profit in a centralized supply chain or maximize the supply chain\u27s profit while keeping the individual components\u27 incentives in a decentralized supply chain. First, a centralized supply chain with two capacitated manufacturing plants situated in two distinct geographical regions is considered. Normally, demand in each region is mostly satisfied by the local plant. However, if the local plant is understocked while the remote one is overstocked, some of the newly generated demand can be assigned to be served by the more remote plant. The sources of the above virtual lateral transshipments, unlike the ones involved in real lateral transshipments, do not need to have nonnegative inventory levels throughout the transshipment process. Besides the theoretical analysis for this centralized supply chain, a computational study is conducted in detail to illustrate the ability of virtual lateral transshipments to reduce the total cost. The impacts of the parameters (unit holding cost, production cost, goodwill cost, etc.) on the cost savings that can be achieved by using the transshipment option are also assessed. Then, a supply chain with one supplier and one retailer is considered where a revenue-sharing contract is adopted. In this revenue-sharing contract, the retailer may obtain the product from the supplier at a less-than-production-cost price, but in exchange, the retailer must share the revenue with the supplier at a pre-set revenuesharing rate. The objective is to maximize the overall supply chain\u27s total profit while upholding the individual components\u27 incentives. A two-stage Stackelberg game is used for the analysis. In this game, one player is the leader and the other one is the follower. The analysis reveals that the party who keeps more than half of the revenue should also be the leader of the Stackelberg game. Furthermore, the adoption of a revenue-sharing contract in a supply chain with two suppliers and one retailer under a limited amount of available funds is analyzed. Using the revenue-sharing contract, the retailer pays a transfer cost rate of the production cost per unit when he obtains the items from the suppliers, and shares the revenue with the suppliers at a pre-set revenue-sharing rate. The two suppliers have different transfer cost rates and revenue-sharing rates. The retailer will earn more profit per unit with a higher transfer cost rate. How the retailer orders items from the two suppliers to maximize his expected profit under limited available funds is analyzed next. Conditions are shown under which the optimal way the retailer orders items from the two suppliers exists

Optimal policy for multi-item systems with stochastic demands, backlogged shortages and limited storage capacity

Producción CientíficaIn this paper, an inventory model for multiple products with stochastic demands is developed. The scheduling period or inventory cycle is known and prescribed. Demands are independent random variables and they follow power patterns throughout the inventory cycle. For each product, an aggregate cycle demand is realized first and then the demand is released to the inventory system gradually according to power patterns within a cycle. These demand patterns express different ways of drawing units from inventory and can be a good approach to modelling customer demands in inventory systems. Shortages are allowed and they are fully backlogged. It is assumed that the warehouse where the items are stored has a limited capacity. For this inventory system, we determine the inventory policy that maximizes the expected profit per unit time. An efficient algorithmic approach is proposed to calculate the optimal inventory levels at the beginning of the inventory cycle and to obtain the maximum expected profit per unit time. This inventory model is applicable to on-line sales of a wide variety of products. In this type of sales, customers do not receive the products at the time of purchase, but sellers deliver goods a few days later. Also, this model can be used to represent inventories of products for in-shop sales when the withdrawal of items from the inventory is not at the purchasing time, but occurs in a period after the sale of the products. This inventory model extends various inventory systems studied by other authors. Numerical examples are introduced to illustrate the theoretical results presented in this work.Ministerio de Ciencia, Innovación y Universidades - Fondo Europeo de Desarrollo Regional (project MTM2017-84150-P