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Vendor-managed inventory (VMI) is emerging as a significant development in the recent trend towards collaboration and information sharing in supply chain management. Transfer of inventory monitoring and other overhead costs to manufacturers and continuous replenishment of retailer inventory are commonly cited as potential benefits that VMI offers to retailers. We provide a new explanation in this paper for why retailers might be interested in VMI. We show that VMI intensifies the competition between manufacturers of competing brands and that the increased competition benefits a retailer that stocks these brands. Competition arises because of brand substitution; that is, some consumers may switch to another brand if their "preferred" brand is out of stock. The manufacturer whose brand is out of stock thus risks losing sales from those consumers who buy the competing brand. Consequently, each manufacturer has an incentive to keep a higher stock of its own brand, not only to satisfy the demand from its customers, but also the spillover demand that arises if a competing brand goes out of stock. When the retailer makes the stocking-level decisions, the competition is mitigated by the pooling of demands at the retailer. VMI restores the competition between the manufacturers and benefits the retailer.retailing, supply chain management, product substitution, inventory management

T he increasing significance of information technology (IT) security to firms is evident from their growing IT security budgets. Firms rely on security technologies such as firewalls and intrusion detection systems (IDSs) to manage IT security risks. Although the literature on the technical aspects of IT security is proliferating, a debate exists in the IT security community about the value of these technologies. In this paper, we seek to assess the value of IDSs in a firm's IT security architecture. We find that the IDS configuration, represented by detection (true positive) and false alarm (false positive) rates, determines whether a firm realizes a positive or negative value from the IDS. Specifically, we show that a firm realizes a positive value from an IDS only when the detection rate is higher than a critical value, which is determined by the hacker's benefit and cost parameters. When the firm realizes a positive (negative) value, the IDS deters (sustains) hackers. However, irrespective of whether the firm realizes a positive or negative value from the IDS, the IDS enables the firm to better target its investigation of users, while keeping the detection rate the same. Our results suggest that the positive value of an IDS results not from improved detection per se, but from an increased deterrence enabled by improved detection. Finally, we show that the firm realizes a strictly nonnegative value if the firm configures the IDS optimally based on the hacking environment.