Heuristic for the cutting and purchasing decisions of multiple metal coils

This paper presents a heuristic algorithm for the rectangular two-dimensional cutting stock problem, where metal coils of multiple widths are divided into rectangular items with guillotine cuts. The cutting process contains two phases. Coils are cut into segments at the first phase and the segments into items at the second phase. A subset of three-staged patterns is considered in generating the cutting plan. The algorithm is used to accomplish the following tasks: (1) Generating cutting plans for the cutting process; (2) Selecting the coil widths to purchase; (3) Optimizing the segment lengths to order. Benchmark instances are used to demonstrate the effectiveness of the algorithm in improving material utilization, and examples are used to illustrate the decision methods for different tasks.     

Reputation and Mechanism Choice in Procurement Auctions: An Experiment

We experimentally study the role of reputation in procurement using two common mechanisms: price‐based and buyer‐determined auctions. While buyers are bound to buy from the lowest bidder in price‐based auctions, they can choose between bidders in buyer‐determined auctions. Only the latter buyers can consider the reputation of bidders. We find that bidders supply higher quality in buyer‐determined auctions leading to higher market efficiencies in these auctions. Accordingly, buyers prefer the buyer‐determined auction over the price‐based auction, while only half of the bidders do so. A more detailed analysis of buyers' and bidders' behavior and profits provides insights into their mechanism choice.     

The Failure of Practical Intuition: How Forward‐Coverage Inventory Targets Cause the Landslide Effect

Seasonal demand for products is common at many companies including Kraft Foods, Case New Holland, and Elmer's Products. This study documents how these, and many other companies, experience bloated inventories as they transition from a low season to a high season and a severe drop in service levels as they transition from a high season to a low season. Kraft has termed this latter phenomenon the “landslide effect.” In this study, we present real examples of the landslide effect and attribute its root cause to a common industry practice employing forward days of coverage when setting inventory targets. While inventory textbooks and academic articles prescribe correct ways to set inventory targets, forward coverage is the dominant method employed in practice. We investigate the magnitude and drivers of the landslide effect through both an analytical model and a case study. We find that the effect increases with seasonality, lead time, and demand uncertainty and can lower service by an average of ten points at a representative company. While the logic is initially counterintuitive to many practitioners, companies can avoid the landslide effect by using demand forecasts over the preceding lead time to calculate safety stock targets.     

Promotion Planning and Supply Chain Contracting in a High–Low Pricing Environment

Demand forecast errors threaten the profitability of high–low price promotion strategies. This article shows how to match demand and supply effectively by means of two‐segment demand forecasting and supply contracts. We find that demand depends on the path of past retail prices, which leads to only a limited number of reachable demand states. However, forecast errors cannot be entirely eliminated because competitive promotions entail some degree of random (i.e., last‐minute) pricing. A hedging approach can be deployed to distribute demand risk efficiently over multiple promotional campaigns and within the supply chain. A retailer that employs a portfolio of forward, option, and spot contracts can avoid both stockouts and excess inventories while achieving the first‐best solution and Pareto improvements. We provide an improved forecasting method as well as stochastic programs to solve for optimal production and purchasing policies such that the right amount of inventory is available at the right time. By connecting a stockpiling model of demand with the supply side, we derive insights on optimal risk management strategies for both manufacturers and retailers in a market environment characterized by frequent price promotions and multiple discount levels. We employ a data set of the German retail market for a key generator of store traffic—namely, diapers.     

How Costs and Heterogeneous Consumer Price Sensitivity Interact with Add‐On Pricing

Firms often cite cost savings as a reason why they charge separately for add‐ons. Firms also often face situations where consumers' price sensitivity is correlated with their valuation of add‐ons. While cost savings may directly translate into profit gains in some scenarios, this study examines the strategic implications of add‐on pricing and is the first to suggest that cost savings from add‐on pricing may in fact result in profit loss for firms when consumers are heterogeneous in price sensitivity. This is because add‐on pricing can trigger a revenue loss that exceeds any cost savings, thus leading to a negative net profit change for competing firms. Even if firms have the capability to pre‐commit to not adopting add‐on pricing, we show that competing firms can be locked in a prisoner's dilemma where all choose to adopt add‐on pricing and lose profits (as compared to none adopting add‐on pricing). We further show the possibility that the greater the cost of providing the add‐on (and the greater the cost savings generated from add‐on pricing), the worse this profit loss gets.     

Optimal Per‐Use Rentals and Sales of Durable Products and Their Distinct Roles in Price Discrimination

We consider a setting in which consumers experience distinct instances of need for a durable product at random intervals. Each instance of need is associated with a random utility and the consumers are differentiated according to the frequency with which they experience such instances of need. We use our model of consumer utility to characterize the firm's optimal strategy of whether to sell, rent, or do a combination of both in terms of the transaction costs and consumers' usage characteristics. We find that the two modes of operation serve different roles in allowing the firm to price discriminate. While sales allow the firm to discriminate among consumers of different usage frequencies, rentals allow it to discriminate according to consumers' realized valuations. Consequently, even when transaction costs are negligible, it is often optimal for the firm to simultaneously rent and sell its product. In addition, we find that although sales and rentals are substitutes and that the offering of sales weakly increases rental prices, it is possible that the introduction of rentals to a pure selling operation can either increase or decrease the optimal sales prices.     

Dynamic Pricing and Inventory Management with Dual Suppliers of Different Lead Times and Disruption Risks

It is common for a firm to make use of multiple suppliers of different delivery lead times, reliabilities, and costs. In this study, we are concerned with the joint pricing and inventory control problem for such a firm that has a quick‐response supplier and a regular supplier that both suffer random disruptions, and faces price‐sensitive random demands. We aim at characterizing the optimal ordering and pricing policies in each period over a planning horizon, and analyzing the impacts of supply source diversification. We show that, when both suppliers are unreliable, the optimal inventory policy in each period is a reorder point policy and the optimal price is decreasing in the starting inventory level in that period. In addition, we show that having supply source diversification or higher supplier reliability increases the firm's optimal profit and lowers the optimal selling price. We also demonstrate that, with the selling price as a decision, a supplier may receive even more orders from the firm after an additional supplier is introduced. For the special case where the quick‐response supplier is perfectly reliable, we further show that the optimal inventory policy is of a base‐stock type and the optimal pricing policy is a list‐price policy with markdowns.     

Shareholder Value Effects of Voluntary Emissions Reduction

The relationship between emissions reduction and firm financial performance has been studied with mixed results. We consider potential sources of this ambiguity by examining announcements of voluntary emissions reduction (VER) from 1990 to 2009. We measure the stock market reaction associated with VER announcements to estimate the effects of time, emissions type, and whether the reduction was announced ex ante or ex post. We find that the market reaction to VER significantly decreased over time. The changing nature of the market reaction to VER over time highlights the importance of evaluating the financial impact of any VER in the current context rather than relying on past findings. We also find that the market reaction is more positive if the reduction is for greenhouse gas (GHG) rather than other emissions types. In light of the increasing concern with GHGs, this finding should be welcome news for managers. Last, we find a more positive market reaction for VER announcements that are pledges or statements of intent rather than realized achievements of VER. Managers contemplating VER might find benefit (and at least no harm) in announcing their intent to reduce emissions rather than waiting until they have achieved the reduction.     

从波动性和流动性判别股指期货跨市场价格操纵行为

股指期货价格操纵一般具有期现跨市场联合操纵的特点,仅按单一市场从波动性分析去判别价格操纵行为是不够充分的。本文引入流动性分析为判别提供了更充分的依据:首先运用GARCH模型分析被操纵资产在波动性的异常变化,判断价格序列偏离了自然特性,具有被操纵的嫌疑;然后利用日交易量、日持仓量和Amivest流动性比率等指标分析流动性的异常变化,发现与根据跨市场操纵过程推测的变化一致,从而构成价格操纵行为的事实依据。     

盈余惯性与价格惯性的关系研究

Fama认为,盈余惯性与价格惯性是仅有的两个对有效市场假说形成真正威胁的、持续的、稳健的市场异象。本文参考Chan等、Chordia和Shivakumar的研究方法,考察我国股市盈余惯性与价格惯性的关系。研究部分支持了Chordia和Shivakumar所提出的噪声代理变量假说,而未支持Chan等所提出的多种信息源假说。我国股市特殊的信息披露环境与投资者行为特征可以解释本文的研究结论。