Optimal Inventory Control with Retail Pre‐Packs

Gao, Long; Thomas, Douglas J.; Freimer, Michael

doi:10.1111/poms.12189

Cited by 20 publications

(10 citation statements)

References 30 publications

(42 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…These early studies, however, focus predominately on downstream information (e.g., inventory and demand forecasts; Gao and Gorman , Gao et al. , Hwang et al. , Xu et al.…”

Section: Empirical and Theoretical Backgroundmentioning

confidence: 99%

Information Acquisition and Voluntary Disclosure in an Export‐Processing System

Gao

Shou

2014

Production and Operations Management

Self Cite

View full text Add to dashboard Cite

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.

show abstract

“…These early studies, however, focus predominately on downstream information (e.g., inventory and demand forecasts; Gao and Gorman , Gao et al. , Hwang et al. , Xu et al.…”

Section: Empirical and Theoretical Backgroundmentioning

confidence: 99%

Information Acquisition and Voluntary Disclosure in an Export‐Processing System

Gao

Shou

2014

Production and Operations Management

Self Cite

View full text Add to dashboard Cite

show abstract

“…Parsons [43] analyzed how the atmosphere in fashion stores influences sales. Gao et al [44] investigated how pre-packs are used in retail distribution and how this reduces handling costs. Notice that fashion and apparel customers do not approach the store with a clear purchase objective, as it would be the case for food in supermarkets or electronic equipment.…”

Section: The Shelf Space Allocation Problemmentioning

confidence: 99%

Using Biased-Randomized Algorithms for the Multi-Period Product Display Problem with Dynamic Attractiveness

et al. 2020

View full text Add to dashboard Cite

From brick-and-mortar stores to omnichannel retail, the efficient selection of products to be displayed on store tables, advertising brochures, or online front pages has become a critical issue. One possible goal is to maximize the overall ‘attractiveness’ level of the displayed items, i.e., to enhance the shopping experience of our potential customers as a way to increase sales and revenue. With the goal of maximizing the total attractiveness value for the visiting customers over a multi-period time horizon, this paper studies how to configure an assortment of products to be included in limited display spaces, either physical or online. In order to define a realistic scenario, several constraints are considered for each period and display table: (i) the inclusion of both expensive and non-expensive products on the display tables; (ii) the diversification of product collections; and (iii) the achievement of a minimum profit margin. Moreover, the attractiveness level of each product is assumed to be dynamic, i.e., it is reduced if the product has been displayed in a previous period (loss of novelty) and vice versa. This generates dependencies across periods. Likewise, correlations across items are also considered to account for complementary or substitute products. In the case of brick-and-mortar stores, for instance, solving this rich multi-period product display problem enables them to provide an exciting experience to their customers. As a consequence, an increase in sales revenue should be expected. In order to deal with the underlying optimization problem, which contains a quadratic objective function in its simplest version and a non-smooth one in its complete version, two biased-randomized metaheuristic algorithms are proposed. A set of new instances has been generated to test our approach and compare its performance with that of non-linear solvers.

show abstract

“…Thus, the fixed cost reduces the ordering frequency, resulting in batch ordering behavior in practice (Gao et al. 2014b). The non‐concavity and the multiperiod nature of the problem, however, make the closed form solution hard to derive.…”

Section: Optimal Dynamic Contractsmentioning

confidence: 99%

Long‐Term Contracting: The Role of Private Information in Dynamic Supply Risk Management

Gao

2015

Production and Operations Management

Self Cite

View full text Add to dashboard Cite

W e examine the critical role of evolving private information in managing supply risk. The problem features a dyadic channel where a dominant buyer operates a multiperiod inventory system with lost sales and fixed cost. He replenishes from a supplier, whose private state of production is vulnerable to random shocks and evolves dynamically over time. We characterize the optimal inventory policy with a simple semi-stationary structure; it distorts order quantity for limiting information rent only in the initial period; the optimal payment compensates for production cost in every period but concedes real information rent only in the initial period. These properties allow us to derive an easy-to-implement revenue-sharing contract that facilitates ex ante strategic planning and ex post dynamic execution. This work advances our understanding on when and how to use private information in dynamic risk management.

show abstract

Optimal Inventory Control with Retail Pre‐Packs

Cited by 20 publications

References 30 publications

Information Acquisition and Voluntary Disclosure in an Export‐Processing System

Information Acquisition and Voluntary Disclosure in an Export‐Processing System

Using Biased-Randomized Algorithms for the Multi-Period Product Display Problem with Dynamic Attractiveness

Long‐Term Contracting: The Role of Private Information in Dynamic Supply Risk Management

Contact Info

Product

Resources

About