Optimal lot sizing under continuous price decrease

An important characteristic of high-tech industries is decreasing component prices over time. In the personal computer industry, some component prices decline at a rate of 1% per week. This paper develops an inventory model for products experiencing continuous decrease in unit price. We develop an accurate closed-form approximate solution to the model. Our results indicate that declining prices lead to substantial decrease in the optimal cycle time and much frequent ordering. This explains the heavy emphasis on just-in-time inventory management practiced by successful companies in high-tech industries. While previous models attributed the success of just-in-time policies to reduced holding cost and improved quality, under declining prices a substantial source of savings becomes lower costs of raw materials which is significant part of cost in these industries. We illustrate the results of the model with a numerical example and perform sensitivity analysis.     

Determination of recovery effort for a probabilistic recovery system under various inventory control policies

In this study we investigate the desired level of recovery under various inventory control policies when the success of recovery is probabilistic. All the used and returned items go into a recovery process that is modelled as a single stage operation. The recovery effort is represented by the expected time spent for it. The effect of increasing recovery effort on the success probability together with unit cost of the operation is included by assuming general forms of dependencies. Alternative to recovered items, demand is satisfied by brand-new items. Four inventory control policies that differ in timing of and information used in purchasing decision are proposed. The objective is to find the recovery level together with inventory control parameter that minimize the long-run average total cost. A numerical study covering a wide range of system parameters is carried out. Finally computational results are presented with their managerial implications.     

Symptoms of Eating Disorders Among Females in Drug Addiction Treatment

The aim of this study is to measure and describe symptoms of eating disorders among females in treatment for drug addiction in Norway. Previous clinical and epidemiological studies have revealed coprevalence between eating disorders and substance use or abuse. However, few studies have measured eating disorders in drug-using samples and even fewer within the context of drug treatment. In this study, 29 females with drug use disorder in residential treatment were tested with the Eating Disorder Inventory–2. A subgroup of 9 females (31%) with significant symptoms of eating disorders was identified. The characteristics of this group and possible clinical consequences are discussed.     

Population structure and correlation between auxiliary and target variables may affect precision of estimates in forest inventory

Simulations of forest inventory in several populations compared simple random with “quick probability proportional to size” (QPPS) sampling. The latter may be applied in the absence of a list sampling frame and/or prior measurement of the auxiliary variable. The correlation between the auxiliary and target variables required to render QPPS sampling more efficient than simple random sampling varied over the range 0.3–0.6 and was lower when sampling from populations that were skewed to the right. Two possible analytical estimators of the standard error of the estimate of the mean for QPPS sampling were found to be less reliable than bootstrapping.     

Support for a Fluid-Continuum Model of Sexual Orientation: A Large-Scale Internet Study

In a study with 17,785 subjects obtained over the Internet from the United States and 47 other countries, Kinsey's hypothesis that sexual orientation lies on a continuum was supported. Self-identifications of subjects as gay, straight, bisexual, and other corresponded to broad, skewed distributions, suggesting that such terms are misleading for many people. Sexual orientation range—roughly, how much flexibility someone has in expressing sexual orientation—was also measured. The results support a fluid-continuum model of sexual orientation, according to which genetic and environmental factors determine both the size of the sexual orientation range and the point at which an individual's sexual orientation is centered on the continuum.     

Inventory and transshipment decisions in the rationing game under capacity uncertainty

In this paper, we consider the inventory decisions of two retailers who are supplied by a single supplier with uncertain capacity. When capacity is allocated in proportion to the retailers׳ orders, the retailers compete for the capacity by inflating their orders (i.e., the rationing game). In addition, we allow the retailers to implement transshipment between them such that they cooperate by transshipping the surplus stock of one to another who is out of stock. Our analysis of Nash equilibrium orders shows that, while order inflation in the equilibrium orders persists in the rationing game with transshipment, it may not occur if the amount of capacity shortage is small and the transshipment prices are low. Thus, carefully chosen transshipment prices may alleviate order inflation behavior. We also characterize centralized orders that maximize the total profit of the retailers and compare them to equilibrium orders. In particular, we investigate coordinating transshipment prices that induce the retailers to choose centralized orders. Our numerical analysis shows that, even for two identical retailers, coordinating transshipment prices exist in a more limited range of parameter values in the rationing game than they do outside the rationing game due to capacity uncertainty and limitation.     

Joint product assortment,inventory and price optimization to attract loyal and non-loyal customers

In this paper, we analyze the emerging retail practice of carrying a combined product assortment consisting of both regular “standard” products and more fashionable and short-lived “special” products. The purpose of this practice is to increase store traffic by attracting heterogeneous classes of customers, which drives up sales of standard products due to the potential cross-selling effect. Customers who are primarily attracted by special products will also buy some standard products. In this context, we analyze three decisions that are crucial for a retailer׳s commercial success: the product assortment, the inventory levels and the pricing. We propose an optimization model and an iterative heuristic to analyze the trade-offs between the combined product assortment, the inventory level and the price per product when there is limited shelf space. Using numerical experiments, we show that our heuristic can be trusted and that its accuracy improves when the number of products increases. Our findings indicate that to attract more customers for standard products, a retailer may benefit from carrying low priced special products which, if considered in isolation, would be non-profitable. As the cross-selling effect decreases, a retailer should focus more on the standard assortment by increasing its size and decreasing the prices. However, introducing special products and ignoring the cross-selling effect may decrease a retailer׳s profitability. We show that the introduction of special products involves more than just choosing the right specials for non-loyal customers but impacts the global assortment planning, the standard products and the products pricing.     

Building up Resilience in a Pharmaceutical Supply Chain through Inventory,Dual Sourcing and Agility Capacity

This paper is inspired by a risk management problem faced by a leading pharmaceutical company. Key operational risk mitigation measures include Risk Mitigation Inventory (RMI), Dual Sourcing and Agility Capacity. We study the relationship between these three measures by modeling the drug manufacturing firm that is exposed to supply chain disruption risk. The firm determines optimal RMI levels for assumed Dual Sourcing and Agility Capacity. We quantify the decrease in RMI levels in the presence of Dual Sourcing and Agility Capacity. Furthermore, using an example, we analyze RMI, Dual Sourcing and Agility Capacity decisions jointly. It turns out that RMI and Agility Capacity can be substitutes as long as no Dual Source is available. Once the Dual Source is available, Agility Capacity and Dual Sourcing appear to be substitutes. We further show that for long disruption times, the optimal Dual Source production rate may decrease in the disruption time. Within our modeling framework, we introduce an operational metric that quantifies Supply Chain Resilience. Supply chain disruptions can have a severe business impact and need to be managed appropriately.     

Effect of Inventory Information Discrepancy in a Drop‐Shipping Supply Chain

This article investigates the impact of information discrepancy between a drop‐shipper and an online retailer on the drop‐shipping supply chain performance. The inventory information misalignment between them contributes to the failure of order fulfillment and demand satisfaction, and hence the associated penalties are incurred. In this article, we first analyze the penalties of ignoring such information discrepancy on both the drop‐shipper and the online retailer. We then assess the impact of information discrepancy on both parties when the drop‐shipper understands the existence of the information discrepancy but is not able to eliminate the errors. The numerical experiments indicate that both parties can have significant amount of the percentage cost reductions if the information discrepancy can be eliminated, and the potential savings are substantial especially when the errors have large variability. Furthermore, we observe that the online retailer is more vulnerable to information discrepancy than the drop‐shipper, and the drop‐shipper is likely to suffer from the online retailer's underestimation of the physical inventory level more than the problem of its overestimation. Moreover, even if eliminating errors is not possible, both parties could still benefit from taking the possibility of errors into consideration in decision making.     

A NOTE ON HOLDING COSTS AND LOT-SIZE ERRORS

This note examines the sensitivity of the basic economic-order-quantity inventory model to lot-size errors when holding costs are assumed to be a strictly increasing (though not necessarily linear) function of average inventory. In particular, we show that the penalty associated with ordering either too much or too little is a function not only of the size of the error but of the shape of the holding-cost curve as well. We demonstrate that, under certain conditions, even relatively small lot-size errors can be extremely costly.