Optimal Ordering Policies for Stochastic Inventory Problems with Observed Information Delays

Information delays exist in an inventory system when it takes time to collect, process, validate, and transmit inventory/demand data. A general framework is developed in this paper to describe information flows in an inventory system with information delays. We characterize the sufficient statistics for making optimal decisions. When the ordering cost is linear, the optimality of a state‐dependent base‐stock policy is established even when information flows are allowed to cross over time. Additional insights into the problem are obtained via a comparison between our models and the models with stochastic order lead times. We also show that inventory can substitute for information and vice versa.     

Multiple In‐Cycle Transshipments with Positive Delivery Times

We study a centralized inventory sharing system of two retailers that are replenished periodically. Between two replenishments, a unit can be transshipped to a stocked‐out retailer from the other. It arrives a transshipment time later, during which the stocked‐out retailer incurs backorder cost. Without transshipment, backorder cost is incurred until the next replenishment. Since the transshipment time is shorter than the time between two replenishments, transshipments can reduce the backorder cost at the stocked‐out retailer and the holding costs at the other retailer. The system is directed by a centralized inventory manager, who minimizes the long‐run average cost consisting of replenishment, holding, backorder, and transshipment costs. The transshipment policy is characterized by hold‐back inventory levels, which are nonincreasing in the remaining time until the next replenishment. The transshipment policy differs from those in the literature because we allow for multiple transshipments between replenishments, positive transshipment times, and backorder costs. We also discuss the challenges associated with positive replenishment time and develop upper and lower bounds of average cost in this case. Bounds are numerically shown to have an average gap of 1.1%. A heuristic solution is based on the upper bound and differs from the optimal cost by at most this gap.     

Rhetoric in the economy: consumption and audience

Consumption is rhetorical. The argument is based on an analogy between discourse in economics and the actual economy. Any chosen bundle of consumption makes a statement. The understanding of the statement requires a rhetorical inquiry into the speaker, audience, and speech situation (e.g., history, language). To understand consumption behavior, I propose to shift attention away from the logic of choice and focus instead on the rhetoric of choice (which includes the logic of choice as a part).     

Optimal Ordering Policies for Inventory Problems With Dynamic Information Delays

Information delays exist when the most recent inventory information available to the Inventory Manager (IM) is dated. In other words, the IM observes only the inventory level that belongs to an earlier period. Such situations are not uncommon, and they arise when it takes a while to process the demand data and pass the results to the IM. We introduce dynamic information delays as a Markov process into the standard multiperiod stochastic inventory problem with backorders. We develop the concept of a reference inventory position. We show that this position along with the magnitude of the latest observed delay and the age of this observation are sufficient statistics for finding the optimal order quantities. Furthermore, we establish that the optimal ordering policy is of state‐dependent base‐stock type with respect to the reference inventory position (or state‐dependent (s, S) type if there is a fixed ordering cost). The optimal base stock and (s, S) levels depend on the magnitude of the latest observed delay and the age of this observation. Finally, we study the sensitivity of the optimal base stock and the optimal cost with respect to the sufficient statistics.     

Economic Evaluation of Systems that Expedite Inventory Information

Information delays exist when the most recent inventory information available to the Inventory Manager (IM) is dated. Such situations arise when it takes a while to process the demand data, count the inventory, and pass the results to the IM. We show that the optimal total inventory‐related cost decreases when the length of the information delay decreases. The amount of the decrease is an important datum for an IM interested in considering whether or not to invest in reducing the delay. The investment is required to finance design and acquisition of an information (collection and dissemination) system that can reduce the information delay. Such systems include phone calls, business meetings, and the use of information collection mechanisms such as radiofrequency identification tags.     

A WTP‐Choice Model: Empirical Validation,Competitive and Centralized Pricing

Willingness To Pay (WTP) of customers plays an anchoring role in pricing. This study proposes a new choice model based on WTP, incorporating sequential decision making, where the products with positive utility of purchase are considered in the order of customer preference. We compare WTP‐choice model with the commonly used (multinomial) Logit model with respect to the underlying choice process, information requirement, and independence of irrelevant alternatives. Using WTP‐choice model, we find and compare equilibrium and centrally optimal prices and profits without considering inventory availability. In addition, we compare equilibrium prices and profits in two contexts: without considering inventory availability and under lost sales. One of the interesting results with WTP‐choice model is the “loose coupling” of retailers in competition; prices are not coupled but profits are. That is, each retailer should charge the monopoly price as the collection of these prices constitute an equilibrium but each retailer's profit depends on other retailers' prices. Loose coupling fails with dependence of WTPs or dependence of preference on prices. Also, we show that competition among retailers facing dependent WTPs can cause price cycles under some conditions. We consider real‐life data on sales of yogurt, ketchup, candy melt, and tuna, and check if a version of WTP‐choice model (with uniform, triangle, or shifted exponential WTP distribution), standard or mixed Logit model fits better and predicts the sales better. These empirical tests establish that WTP‐choice model compares well and should be considered as a legitimate alternative to Logit models for studying pricing for products with low price and high frequency of purchase.     

Association Between Unemployment Duration and Depression in the SouthWest Region of Turkey: A Cross-Sectional Study

ABSTRACT

Unemployment has risen as an effect of globalization in the country of Turkey. To date, no studies have examined the association between the duration of unemployment and perceived mental health. Therefore, the aim of this study is to evaluate the association between the duration of unemployment and the incidenence of depression among citizens in the southwest region of Turkey. A questionnaire was developed and distributed to 908 unemployed individuals. The questionnaire gathered sociodemographic characteristics and employment-related circumstances. To measure mental health, a depression inventory was administered and group-wise t-tests and logistic regressions were conducted. The findings show that long-term unemployed persons had more episodes of depressive moods in the past 12 months when compared with the group of the short-term unemployed. In addition, depression levels were higher among the long-term unemployed compared with the short-term unemployed. It was estimated that the duration of unemployment and the measurement of depression had a positive correlation. Risk factors that increased depression in the short-term unemployed were gender (female), older age, and greater periods of unemployment. However, higher education, income, and having social insurance significantly decreased the risk of developing depression for both the short-term and the long-term unemployed. Future recommendations include supportive counseling to increase motivation levels and developing strategies to handle periods of unemployment.     

Contracting and Coordination under Asymmetric Production Cost Information

We analyze a supply chain consisting of a supplier and a retailer. The supplier's unit production cost, which characterizes his type, is only privately known to him. When trading with the retailer, the supplier demands a reservation profit that depends on his unit production cost. We model this problem as a game of adverse selection. In this model, the retailer offers a menu of contracts, each of which consists of two parameters: the ordering quantity and the supplier's share of the channel profit. We show that the optimal contract depends critically on a surrogate measure—the ratio of the types’ reservation profit differential to their production cost differential. An important implication from our analysis is that information asymmetry alone does not necessarily induce loss in channel efficiency. The optimal contract can coordinate the supply chain as long as the low‐cost supplier's cost efficiency is neither much overvalued nor much undervalued in the outside market. We further discuss the retailer's preference of the supplier's type under different market conditions, as well as evaluate the effects of the supplier's reservation profit, the retail price, and the demand uncertainty on the optimal contract.     

Petroleum and Hazardous Material Releases from Industrial Facilities Associated with Hurricane Katrina

Hurricane Katrina struck an area dense with industry, causing numerous releases of petroleum and hazardous materials. This study integrates information from a number of sources to describe the frequency, causes, and effects of these releases in order to inform analysis of risk from future hurricanes. Over 200 onshore releases of hazardous chemicals, petroleum, or natural gas were reported. Storm surge was responsible for the majority of petroleum releases and failure of storage tanks was the most common mechanism of release. Of the smaller number of hazardous chemical releases reported, many were associated with flaring from plant startup, shutdown, or process upset. In areas impacted by storm surge, 10% of the facilities within the Risk Management Plan (RMP) and Toxic Release Inventory (TRI) databases and 28% of SIC 1311 facilities experienced accidental releases. In areas subject only to hurricane strength winds, a lower fraction (1% of RMP and TRI and 10% of SIC 1311 facilities) experienced a release while 1% of all facility types reported a release in areas that experienced tropical storm strength winds. Of industrial facilities surveyed, more experienced indirect disruptions such as displacement of workers, loss of electricity and communication systems, and difficulty acquiring supplies and contractors for operations or reconstruction (55%), than experienced releases. To reduce the risk of hazardous material releases and speed the return to normal operations under these difficult conditions, greater attention should be devoted to risk‐based facility design and improved prevention and response planning.