Behavioral Implications of Demand Perception in Inventory Management

The newsvendor problem is one of the rudimentary problems of inventory management with significant practical consequences, thus receiving considerable attention in the behavioral operational research literature. In this chapter, we focus on how decision makers perceive demand uncertainty in the newsvendor setting and discuss how such perception patterns influence commonly observed phenomena in order decisions, such as the pull-to-center effect. Drawing from behavioral biases such as over precision, we propose that decision makers tend to perceive demand to be smaller than it actually is in high margin contexts, and this effect becomes more pronounced with increases in demand size. The opposite pattern is observed in low margin settings; decision makers perceive demand to be larger than the true demand, and this tendency is stronger at lower mean demand levels. Concurrently, decision makers tend to perceive demand to be less variable than it actually is, and this tendency propagates as the variability of demand increases in low margin contexts and decreases in high margin contexts. These perceptions, in turn, lead to more skewed decisions at both ends of the demand spectrum. We discuss how decision makers can be made aware of these biases and how decision processes can be re-designed to convert these unconscious competencies into capabilities to improve decision making

Empirical Models of Manufacturer-Retailer Interaction: A Review and Agenda for Future Research

The nature of the interaction between manufacturers and retailers has received a great deal of empirical attention in the last 15 years. One major line of empirical research examines the balance of power between them and ranges from reduced form models quantifying aggregate profit and other related trends for manufacturers and retailers to structural models that test alternative forms of manufacturer-retailer pricing interaction. A second line of research addresses the sources of leverage for each party, e.g., trade promotions and their pass-through, customer information from loyalty programs, manufacturer advertising, productassortment in general, and private label assortment in particular. The purpose of this article is to synthesize what has been learnt about the nature of the interaction between manufacturers and retailers and the effectiveness of each party’s sources of leverage and to highlight gaps in our knowledge that future research should attempt to fill

Application of Optimal Impulsive Control Method to Advertising

Advertising departments in companies face hard choices when have to decide how much and when to spend on advertising over the year in order to maximize the customer goodwill and minimize the advertising expenditure. To address these issues, this paper proposes an optimal impulsive control method, in which the control is discrete and only applied when the goodwill is below some pre-specified level. Optimality conditions for impulse driven systems are derived first. Simulation results based on optimal impulsive control method and an existing technique are presented. Analysis of the results show that integrated goodwill is greater with the optimal impulsive control method. Furthermore, this paper describes how to find a feasible suboptimal solution when an optimal solution doesn\u27t exist

What is happening to my nearby stores? The own- and cross-effect of a radical store transformation on existing customers

Brick-and-mortar grocery retailers that undertake major format changes often do so in a staggered rollout and radically transform just one store at a time. This approach begs two questions: What effects does a radical store transformation have on existing customers’ sales at the transformed store (own-effect) and at the chain’s nearby untransformed stores (cross-effect)? Do the effects vary with customer characteristics? These questions are investigated using a quasi-field experiment of a staggered radical store transformation of a German retailer. Conventional wisdom would predict cannibalization of nearby untransformed stores’ sales. However, applying our proposed theoretical framework shows, for this empirical case, a negative own- but a positive cross-effect on existing customers. Further, existing customers who had a greater preference for and shopped more at the old format are most likely to migrate. Thus, nearby untransformed stores can help retain existing customers who may get turned off by a radical store transformation

Do Style-Goods Retailers’ Demands for Guaranteed Profit Margins Unfairly Exploit Vendors?

Retailers, particularly those in the style-goods and fashion apparel industry, are increasingly demanding guaranteed profit margins (GPMs) from their vendors. Under a GPM stipulation, a vendor has to offer a rebate to maintain the retailer’s target margin on the item if the retailer is compelled to take a markdown from the initial price to sell out the ordered quantity for the season. Vendors dispute retailers’ claim that a GPM is a “win-win” mechanism for both parties. They rather view it as a coercive device. The authors examine this issue in a multistage game with demand uncertainty. Interestingly, the analysis shows that depending on the level of demand uncertainty, it may be optimal for the vendor to lower rather than raise his wholesale price upon being asked for a GPM. Further, the analysis shows that under conditions of low demand uncertainty the provision of a GPM by the vendor to the retailer can indeed yield higher profits for both parties than in the NO GPM case. Copyright Springer Science + Business Media, Inc. 2005retailing management, demand uncertainty, dynamic pricing, guaranteed profit margins,

Pesticides and Bladder Cancer: Mechanisms Leading to Anti-Cancer Drug Chemoresistance and New Chemosensitization Strategies

Multiple risk factors have been associated with bladder cancer. This review focuses on pesticide exposure, as it is not currently known whether agricultural products have a direct or indirect effect on bladder cancer, despite recent reports demonstrating a strong correlation. While it is known that pesticide exposure is associated with an increased risk of bladder cancer in humans and dogs, the mechanism(s) by which specific pesticides cause bladder cancer initiation or progression is unknown. In this narrative review, we discuss what is currently known about pesticide exposure and the link to bladder cancer. This review highlights multiple pathways modulated by pesticide exposure with direct links to bladder cancer oncogenesis/metastasis (MMP-2, TGF-β, STAT3) and chemoresistance (drug efflux, DNA repair, and apoptosis resistance) and potential therapeutic tactics to counter these pesticide-induced affects