Inventories, Manufacturer Returns Policies, and Equilibrium Price Dispersion Under Demand Uncertainty PDF Download
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Author: Howard P. Marvel
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Returns policies can prevent a manufacturer's product from being discounted. Such discounting discourages inventory holdings, and can deny adequate retail representation to products with uncertain demand. We demonstrate that returns are not simply a substitute for resale price maintenance, but can instead be employed to support a desirable degree of price dispersion at retail. Surprisingly, optimal return policies depend only on market demand functions and marginal production costs. The manufacturer need not know the distribution of demand uncertainty for its product, but can instead rely on retailers to order appropriately. Our results generalize to oligopoly settings.
Author: Howard P. Marvel
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Returns policies can prevent a manufacturer's product from being discounted. Such discounting discourages inventory holdings, and can deny adequate retail representation to products with uncertain demand. We demonstrate that returns are not simply a substitute for resale price maintenance, but can instead be employed to support a desirable degree of price dispersion at retail. Surprisingly, optimal return policies depend only on market demand functions and marginal production costs. The manufacturer need not know the distribution of demand uncertainty for its product, but can instead rely on retailers to order appropriately. Our results generalize to oligopoly settings.
Author: Padmanābhan, Vi
Publisher:
ISBN:
Category : Retail trade
Languages : en
Pages : 34
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Author: Jonas D. M. Fisher
Publisher: London, Ont. : Department of Economics, University of Western Ontario
ISBN:
Category : Business & Economics
Languages : en
Pages : 64
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Author: Paddy Padmanabhan
Publisher:
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Category :
Languages : en
Pages : 0
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We show that returns policies increase manufacturer profitability by attenuating price competition between retailers. This effect holds only in the presence of end-user demand uncertainty. The conditions under which a returns policy raises the manufacturer's profit are weaker when retailing is a duopoly than when retailing is a monopoly. This suggests that returns policies serve both to dampen competition and resolve demand uncertainty.
Author:
Publisher:
ISBN:
Category : Retail trade
Languages : en
Pages :
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Author: Mehmet Sekip Altug
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
While the primary effort of all retailers is to generate that initial sales, return management is generally identified as a secondary issue that does not necessarily need the same level of planning and proactive strategies. In this article, we position return management as a process that is at the interface of both inventory and revenue management by explicitly incorporating the return policy of the retailer in consumer's valuation. We consider a retailer that sells a fixed amount of inventory over a finite horizon. We assume that return policy is a decision variable that can be changed dynamically at every period. While flexible return policies generate more demand, it also induces more returns. We characterize the optimal dynamic return policies based on two costs of return scenarios. We show a conditional monotonicity result and discuss how these return policies change with respect to inventory and time. We then propose a heuristic and prove that it is asymptotically optimal. We also study the joint dynamic pricing and dynamic return management problem in the same setting and propose two more heuristics whose performance is tested numerically and found to be close to optimal for higher inventory levels. We extend our model to multiple competing retailers and characterize the resulting equilibrium return policy and prices.
Author: Miklos Sarvary
Publisher:
ISBN:
Category :
Languages : en
Pages : 14
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Book Description
Returns policies are usually though of as being a way to insure retailers against excess inventory. The work of Pellegrini(1986), Chu (1993), Lin (1993) and Padmanabhan and Png (1997) highlights the fact that there is considerably more toreturns polices than just a mechanism for insurance. Our work identifies a heretofore undocumented rationale for returnspolicy: its role in learning the demand for a new product. The model of manufacturer-retailer interaction assumes that thedemand is uncertain but correlated across time periods. Thus, its true nature is revealed over time via the realization of sales.The speed of such learning depends on the size of the inventory at the retail level which in turn can be strategically influencedby the manufacturer through a returns policy. In such environment, we show that a return policy may be a way for themanufacturer to learn the demand of a new product.
Author:
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Category :
Languages : en
Pages :
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Book Description
In the first part, we develop a (Q, r) model based on fuzzy-set representations of various sources of uncertainty in the SC. Sources of risk and uncertainty in our model include demand, lead time, supplier yield, and penalty cost. The naturally imprecise nature of these risk factors in managing inventories is represented using triangular fuzzy numbers. In addition, we introduce a human risk attitude factor to quantify the decision maker's attitude toward the risk of stocking out during the replenishment period. The total cost of the inventory system is computed using defuzzification methods built from techniques identified in the literature on fuzzy sets. A numerical example is provided to compare our fuzzy-set computations with those generated by more traditional models that assume full knowledge of the distributions of the stochastic parameters in the system. Our analysis supports that fuzzy set theory provides a means of actually quantifying the cost of not knowing the underlying demand distribution and parameters. In the second part, we construct a serial multiple-level SC coordination model by (Q, r) policies in the same fuzzy risk environment presented in the first part. Heuristics analogous to classical (Q, r) policies are presented to determine local optimal policies for multiple installation instances on the basis of techniques identified in the literature on fuzzy sets. An external coordinator with three roles is introduced and a coordination process is implemented to improve SC performance to meet a target. Numerical examples and simulation results are given to illustrate heuristics and validate coordination processes. In the third part, we study the impact of continuous review inventory policy by a supplier with partial and random yield. We first examine revised EOQ model with a two-stage partial yield supplier, then we discuss (Q, r) policy under a supplier with one additional stage of supply stoppage. We assume that demand arrival follows Poisson process.
Author: Alexandre Dolgui
Publisher: Springer Science & Business Media
ISBN: 1849960178
Category : Technology & Engineering
Languages : en
Pages : 541
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Book Description
Supply Chain Engineering considers how modern production and operations management techniques can respond to the pressures of the competitive global marketplace. It presents a comprehensive analysis of concepts and models related to outsourcing, dynamic pricing, inventory management, RFID, and flexible and re-configurable manufacturing systems, as well as real-time assignment and scheduling processes. A significant part is also devoted to lean manufacturing, line balancing, facility layout and warehousing techniques. Explanations are based on examples and detailed algorithms while discarding complex and unnecessary theoretical minutiae. All examples have been carefully selected from an industrial application angle. This book is written for students and professors in industrial and systems engineering, management science, operations management and business. It is also an informative reference for managers looking to improve the efficiency and effectiveness of their production systems.
Author: Hao Wang
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
A previous study finds that in a market where a manufacturer faces uncertain demand and sells to consumers through competitive retailers, the manufacture wishes to support adequate retail inventories by imposing resale price maintenance (RPM). I show that if retail inventories are allocated to consumers through first-come-first-served rule rather than efficient rationing rule in the game with unconstrained retail competition, imposing RPM may not be profitable. It may not encourage more retail inventories either. RPM may also lower consumer surpluses and social welfare. This study casts some doubt on the demand uncertainty theory that supports RPM.
