A PROFIT-MAXIMIZATION MODEL FOR A RETAILER'S STOCKING DECISIONS ON PRODUCTS SUBJECT TO SUDDEN OBSOLESCENCE

A product has been formally denned as being subject to sudden obsolescence if its lifetime is negative exponentially distributed. Using an approximate model, Masters suggested that the traditional method of incorporating obsolescence cost as a component of inventory holding costs in the economic order quantity (EOQ) model was appropriate-for products subject to sudden obsolescence, provided that the obsolescence cost component was computed properly. Unfortunately, current practice of the EOQ model seriously underestimates the costs of sudden obsolescence. An exact model demonstrating that Masters' model also underestimated true lifetime costs and overestimated the optimal order quantity has been presented. Neither of these models addressed quantity discounts. Furthermore, with their cost-minimization focus, these models fail to identify situations when minimized costs exceed expected revenues. We extend Joglekar and Lee's model to focus on maximizing profits, rather than minimizing costs. This model answers such questions as whether to stock the product at all, whether to accept a quantity discount offer, and what order quantity to use. Numerical examples and sensitivity analyses suggest that Masters' model provides a significant improvement over the traditional model in moving toward true optimality. However, they also illustrate situations where both the traditional and the Masters' model accept a quantity discount that deserves to be rejected and stock a product that should not be stocked. In such situations, it seems important that a retailer uses the profit-maximization model presented here.     

The Individually Responsible and Rational Decision Approach to Economic Lot Sizes for One Vendor and Many Purchasers

Banerjee's [2] joint economic lot size (JELS) model, along with related works by Monahan [12] and Lal and Staelin [10], represents one approach to minimizing the total inventory carrying and ordering costs of a vendor and his purchaser(s). Noting that JELS philosophy requires a coordinated system and that its practical implementation is problematic, we present an alternative approach to the same problem: the individually responsible and rational decision (IRRD) approach. The IRRD approach is consistent with a free enterprise system and easy to implement. In order to show that the IRRD approach is also more economical than the JELS approach, we first build a more refined JELS model for the case of one vendor and many identical purchasers. Drawing on earlier criticisms of specific JELS models, our refinement relaxes the lot-for-lot assumption commonly used by JELS scholars. To be comparable with earlier works, we retain the assumption of deterministic conditions and demonstrate the economic advantages of IRRD over JELS through a numerical example. An algebraic proof of IRRD's superiority over JELS is offered in the more general and realistic case of a vendor dealing with K nonidentical purchasers with reasonably predictable annual demand but uncertain order quantities and timings.     

The Role of Operations Management Across the Entrepreneurial Value Chain

This special issue contains articles that exemplify the role of operations management across the entrepreneurial value chain. This value chain encompasses all stages of the entrepreneurial phenomenon, including technology commercialization, where discovery, commitment, organization, and growth must take place. We report on a literature search that identifies research questions categorized with respect to topics crucial to operations management scholars and classify these questions under each stage of this value chain. The search guides the development of an evolutionary path for the use of resources, routines, and reputation (3Rs), often lacking in this process, and enables us to propose modeling and topical gaps in the literature. We offer a framework to set up exemplars for operational tradeoffs uniquely associated with the entrepreneurial value chain. We also articulate how five contributed articles in this issue tackle some of these tradeoffs, prior to introducing four perspective pieces. We hope this discussion motivates follow‐on work and triggers a significant increase in the flow of articles that make it to both entrepreneurship and operations management top‐tier academic and practitioner publications.     

A network algorithm for the exact treatment of the 2×k contingency table

A common statistical problem encountered in biomedical research is to test the hypothesis that the parameters of k binomial populations are all equal. An exact test of significance of this hypothesis is possible in principle, the appropriate null distribution being a normalized product of k binomial coefficients. However, the problem of computing the tail area of this distribution can be formidable since it requires the enumeration of all sets of k binomial coefficients whose product is less than a given constant. Existing algorithms, all of which rely on explicit enumeration to generate feasible binomial coefficients     

The Impacts of Alliance Purpose and Partner Similarity on Alliance Governance

It is generally recognized that the governance structure of an alliance has an impact on its probability of success. In this study, we examine the choice between two alternative alliance governance structures: equity and non-equity. Drawing from transaction cost economics, two sets of factors, namely alliance purpose (R&D or marketing) and cultural distance between partners, are hypothesized to influence the above choice. We further hypothesize that collaborative R&D alliances, where both parties contribute technical knowledge, are more likely to lead to the formation of equity alliances than non-collaborative research agreements, where only one partner may be doing the research work. Based on a sample of 2407 alliances formed in the global biotechnology industry, we find partial support for the hypothesized relationships. Specifically, we find that collaborative R&D alliances are more likely to be equity alliances, whereas non-collaborative R&D alliances do not have any impact on the choice of the governance form. We also find that alliances formed with a marketing purpose are less likely to be equity alliances. We did not find any relationship between cultural distance and the choice of equity alliances.     

Survival during a Crisis: Alliances by Singapore Firms

In this study, we focus on the under‐researched issue of how environmental shocks impact alliance survival. We draw from several different theoretical perspectives such as industrial organization economics, managerial theories of the firm (such as agency theory) and institutional theories. We argue that the relationship between the occurrence of environmental shock and alliance survival is a contingent one. Specifically, we hypothesize that the following types of alliances will exhibit better likelihood of survival: alliances that yield a balance of short‐term and long‐term benefits (scale alliances) rather than purely long‐term benefits (link alliances); alliances that lead to either cost reduction or near‐term improvement in revenue realization (marketing alliances); and alliances that bring together partners from different economic regions (those involving Western and Asian partners). Based on an analysis of 348 alliances formed by Singapore firms, we find that marketing alliances and those involving at least one Western partner indeed exhibit a better likelihood of survival during the Asian economic crisis. We conclude that alliances that can enhance revenue potential in the short‐term are more robust to environmental shocks and that alliances can benefit from an effect similar to risk reduction through international diversification.     

Epilepsy in older women

Women suffering from epilepsy require special attention throughout their life. In this review, management of epilepsy during the periods of perimenopause, menopause and late maturity is discussed. The effect of epilepsy on age at menopause, changes in seizure frequency during perimenopause and menopause, and the risks of hormone replacement therapy are also presented. Altered antiepileptic drug pharmacokinetics with increasing age and the management of this vulnerable population is also discussed.