No abstract

T he process of introducing new and phasing out old products is called product rollover. This paper considers a periodic-review inventory system consisting of a manufacturer and a retailer, where the manufacturer introduces new and improved products over an infinite planning horizon using the solo-roll strategy. We consider two scenarios: (1) the manufacturer does not share the upstream information about new-product introduction with the retailer and (2) the manufacturer shares the information. For each scenario, we first derive the decentralized ordering policy and the system-optimal ordering policy with given cost parameters. We then devise an optimal supply chain contract that coordinates the inventory system. We demonstrate that when the inventory system is coordinated, information sharing improves the performance of both supply chain entities. However, this may not be true if the inventory system is not coordinated. We also show that under the optimal contract, the manufacturer has no incentive to mislead the retailer about new-product information in the informationsharing model. When demand variability increases, information sharing adds more benefits to the coordinated supply chain. Our research provides insights about coordinating product, financial, and information flows in supply chains with product rollover.

W e study a strategic information management problem in the export-processing trade, where the buyer controls the raw material input and sales and the producer is responsible for production. The production is vulnerable to random yield risk. The producer can exert a costly effort to acquire the private yield rate information and discretionarily share it with the buyer. We develop a sequential Bayesian game model that captures three key features of the systemendogenous information endowment, voluntary disclosure, and ex post information sharing-a significant departure from the literature. The optimal disclosure strategy is driven by the trade-off between the gains from Pareto efficiency improvement and self-interested overproduction. It is specified by two thresholds on yield rate: only the middle-yield producers (with yield rate between these two thresholds) share private information to improve supply-demand match; the low-and high-yield producers withhold information to extract excess input from the buyer. The buyer in response penalizes nondisclosure with reduced input and rewards information sharing with a larger order. This strategic interaction is further exacerbated by the double marginalization effect from decentralization, resulting in severe efficiency loss. We examine the effectiveness of three corrective mechanisms-vertical integration, mandatory disclosure, and production restriction-and reveal the costs of information suppressive effect and overinvestment incentive and the benefit from concessions on the processing fee. Our study endogenizes the asymmetric supply risk and provides the first attempt to rationalize the strategic interactions of informational and operational incentives in the export-processing system.

This paper studies a single‐period assortment optimization problem with unequal cost parameters. The consumer choice process is characterized by a Multinomial Logit (MNL) model. When the store traffic is a continuous random variable, we explicitly derive the structure of the optimal assortment. Our approach is to use a comprehensive measure–profit rate to evaluate the profitability of each variant and then determine which product should be offered. We demonstrate that the optimal assortment contains the few items that have the highest profit rate. When the store traffic is discrete, the optimal solution is difficult to obtain. We propose a “profit rate” heuristic, which is inspired by the result for the case of continuous store traffic. In a special case with equal cost parameters and normal demand distribution, the profit rate heuristic is indeed optimal. Using randomly generated data, we test the effectiveness of the heuristic and find that the average percentage error is less than 0.1% and that the hit rate is above 90%. Our research provides managerial insights on assortment planning and accentuates the importance of measuring the profitability of each product when the demand is random and cannibalization among different products exists.