Markdowns in Seasonal Conspicuous Goods

In common parlance, luxury and markdowns are, in many respects, contradictory concepts. Markdowns decrease product exclusivity and hence consumers’ willingness to pay (i.e., snob effect) since most consumers purchasing luxury desire uniqueness. Markdowns also encourage strategic (forward-looking) consumers to wait for lower prices (i.e., strategic effect). Yet, luxury retailers frequently adopt markdowns in practice to stimulate the demand for their seasonal products (i.e., sales effect). To study the impact of these three countervailing effects on a luxury retailer’s markdown policy and rationing strategy, this paper develops a game-theoretic model with strategic and exclusivity-seeking consumers who have heterogeneous (high and low) valuations. We characterize a luxury retailer’s equilibrium markdown and rationing strategies, and find that the retailer induces a buying frenzy (i.e., selling deliberately less than the demand) to increase consumers’ willingness to pay when they are sufficiently exclusivity-seeking. We show that the retailer’s markdown policy depends on consumers’ desire for exclusivity when the proportion of consumers with high valuation is not too high or too low. Interestingly, we find that, in such cases, consumers’ higher desire for exclusivity does not motivate the retailer to increase exclusivity and to adopt uniform pricing. To the contrary, it motivates the retailer to decrease the exclusivity and to adopt markdowns. By doing so, we identify exclusivity-seeking consumer behavior as another rationale behind markdown pricing. Lastly, we find that, when selling to exclusivity-seeking consumers, the negative impact of strategic consumer behavior is lower; however, ignoring it can be more costly

In-House Globalization: The Role of Globally Distributed Design and Product Architecture on Product Development Performance

Changes in the global economy and technological advances are stimulating increased geographic distribution of new product design and development efforts. For large organizations that design and develop complex products, this geographic distribution has added a new layer of complexity to product development operations. In this empirical study of a large auto manufacturer, we examine the operational performance implications of splitting the design of vehicle subsystems across multiple geographic locations. Our results indicate that global distribution diminishes the chance of completing tasks on time and degrades subsystem design quality. Finally, by examining the interplay between subsystem centrality and global distribution, we found that higher centrality in the product architecture amplifies the impact of global distribution on subsystem error rates

Optimizing nursing human resource planning in British Columbia

Health workforce planning, Human resource planning, Optimization, Linear programming, Manpower, Training, Attrition, Capacity planning, Promotion rules, Learning,

Invariant measures and error bounds for random walks in the quarter-plane based on sums of geometric terms

We consider homogeneous random walks in the quarter-plane. The necessary conditions which characterize random walks of which the invariant measure is a sum of geometric terms are provided in [2,3]. Based on these results, we first develop an algorithm to check whether the invariant measure of a given random walk is a sum of geometric terms. We also provide the explicit form of the invariant measure if it is a sum of geometric terms. Secondly, for random walks of which the invariant measure is not a sum of geometric terms, we provide an approximation scheme to obtain error bounds for the performance measures. Finally, some numerical examples are provided