Optimal procurement strategies by reverse auctions with stochastic demand

This paper studies a dynamic procurement problem by reverse auction for a retailer with stochastic demand. In each period, the retailer based on his inventory needs to determine a payment function (a procurement contract) according to which a number of potential suppliers compete in the reverse auction. We show the existence of the retailer's optimal payment function and find that the suppliers' Bayesian–Nash equilibrium bidding strategy is similar to the base-stock policy in the traditional multi-period inventory control problems when the retailer incurs no fixed setup cost, while similar to the (s, S) policy when the retailer incurs a fixed setup cost. This strategy is for the suppliers, instead of for the retailer, depends on the supplier's marginal cost and so is stochastic for the retailer. Thus, this paper extends well beyond traditional procurement environments studied so far in the inventory control literature.     

Optimal Advance Selling Strategy under Price Commitment

This paper studies a two‐period model of advance selling with experienced and inexperienced consumers. It concludes that advance selling weakly dominates no advance selling, and the optimal advance selling price may be at a discount, at a premium or at the regular selling price. Conditions for each possible advance selling strategy to prevail are characterized. However, without experienced consumers in the market, there are no incentives for the retailer to implement an advance selling price premium. How the consumer composition affects the retailer's optimal pricing strategy and profit is also examined.     

Optimal contract strategies for two stage supply chain

The present article investigates the issue of channel coordination of a manufacturer and a retailer facing stochastic demand that is sensitive to promotional effort. In newsvendor setting, the return policy, sharing contract on promotional effort, and discount on whole sales price provided by the manufacturer have been shown to be able to align incentives of the members of the chain. An analytical method has been provided to determine the optimal contract parameters of the channel. Numerical examples are also illustrated to justify the model.     

Dynamic monopoly production,inventory, and price policy under sophisticated demand

In this paper a dynamic demand surface arises out of a consumer intertemporal utility maximization problem. The monopolistic firm uses this dynamic demand surface to formulate its optimal price, production, and inventory policy.     

Adjustment Costs,Inventories and Output

This paper analyzes the optimal adjustment strategy of an inventory‐holding firm facing price‐ and quantity‐adjustment costs in an inflationary environment. The model nests both the original menu‐cost model that allows production to be costlessly adjusted, and the later model that includes price‐ and quantity‐adjustment costs, but rules out inventory holdings. It is shown that the firm's optimal adjustment strategy may involve stockouts. At low inflation rates, output is inversely related to the inflation rate, and the length of time demand is satisfied increases with the demand elasticity but decreases with the storage cost and the real interest rate.     

Joint decision on pricing and advertising for competing retailers under emergency purchasing

This paper investigates an inventory decision problem under the pricing and advertising dependent stochastic demand, and considers a joint decision on pricing and advertising for competing retailers who operate short-life-cycle products under emergency purchasing. The results indicate that the retailer always prefers to advertise whether under a single or dual channel system. However, both the optimal prices and stocks increase, whereas customer welfare decreases.     

延期支付下部分价格折扣的变质物品订货模型

一般的延期支付库存模型将产品采购价视为固定不变的,而实际商业活动中,价格折扣是供应商促销的一种常用手段。本文在进一步考虑"数量界限"的价格折扣问题的基础上,建立了一个延期支付下部分价格折扣的变质物品经济订购批量模型,分析了两种情况下订货商的最优订货策略,并用算例进行了说明。     

The Dynamics of Markups and Inventories in Retailing Firms

This paper is concerned with the interaction between price and inventory decisions in retailing firms and its implications for the dynamics of markups and the existence of sales promotions. We consider a model where a monopolistically competitive retailer decides price and inventories, and assumes lump-sum costs when placing orders or changing nominal prices. In this model, the existence of stockout probabilities and fixed ordering costs generate a cyclical price behaviour characterized by long periods without nominal price changes and short periods with very low prices ( i.e. sales promotions). We estimate this model using a unique longitudinal dataset with information about retail and wholesale prices, inventories, orders, and sales for several brands in a supermarket chain. Based on the estimated model we perform several counterfactual experiments that show the important role that inventories and fixed ordering costs play in the dynamics of retail prices and the frequency of sales promotions in this dataset.     

Regulatory tune-ups

Regulators cannot continuously and perfectly monitor firms. The alternative considered here supposes the regulator sets prices at discrete, unforeseen, times. I show that when marginal cost follows a stochastic diffusion process, but the regulator only irregularly adjusts the regulated price, the optimal price may be less than or greater than the expected level of marginal costs. The regulated price should be higher the steeper the demand curve, the lower the discount rate, and the greater the variance of costs. The social benefit of changing the price following a change in marginal cost is usually greater if at the time price was set marginal cost was low.     

Multi-item EOQ model while demand is sales price and price break sensitive

In this paper, the authors study a multi-item deterministic EOQ (economic order quantity) model for a vendor when the demand rate of the essential commodities decreases quadratically with increasing sales price and increase exponentially with increasing level of price breaks. A price discount is offered to the customers when the revenue of the vendor crosses the level of price break. The main aim of the present article is to find out the optimal order quantities, optimal selling prices and optimal level of price break in order to maximize the average profit of the whole products. Numerical examples are also illustrated to test of our proposed model.     

Optimal replenishment order for uncertain demand in three layer supply chain

The authors study the well-known order quantity model in a three-player context, using a framework of newsboy problem. An expected average cost function of the chain by trading off inventory cost and shortage costs is formulated which is minimized to obtain optimal order sizes of the supplier, manufacturer and retailer. Our theoretical analysis of both cases; (i) when demand per unit time of each member of the chain is uncertain, (ii) when uncertain demand is distributed uniformly over finite time horizon; suggests the determining of optimal order sizes of the members so that the expected average channel cost is minimum. Numerical examples for different distributions are illustrated to justify our model.     

Dilemma of rented warehouse and shelf for inventory systems with displayed stock level dependent demand

Impact of display stock has been extensively discussed in literature in terms of stock dependent demand rate. In some recent papers a three-component inventory level dependent demand (as displayed stock level (DSL)) has been proposed. It has been assumed that demand is independent of instantaneous inventory level if inventory is above a certain level in a shelf. As the demand is independent of instantaneous inventory level, a retailer is always in dilemma whether inventory additional to that level will be kept in the shelf or to rent a new storage. In this paper we focus on this by developing three mathematical models. We show that the problem in choosing rented storage or shelf to keep additional inventory can always be eliminated (a) without the knowledge of optimal stocking points or (b) with the knowledge of any one optimal stocking point. Also, if there is enough opportunity to have an extra storage and a mild limit on inventory holding cost in the shelf is satisfied, then there is no need to display inventory in the shelf above the certain level. The results are illustrated by numerical examples and sensitivity analysis is carried out.     

Asymmetries in price and quantity adjustments by the competitive firm

Focusing on the crucial role of inventory carry-overs in the production and sales decision, we describe the profit maximizing behavior of a dynamic competitive firm facing random prices. Each firm's behavior is incorporated into a stochastic equilibrium model of the competitive industry with uncertain demand. The industry model exhibits asymmetric cyclical fluctuations of the “Keynesian” sort: when demand is weak, output contracts while price holds at a fixed floor; when demand is strong, price increases as output is constrained by a ceiling. Even in a pure world of constant returns, without increasing costs, the inability to instantaneously coordinate production and sales along with the existence of inventories is sufficient to yield a “backward L” shaped supply curve for the short run.     

供应商管理库存中的道德风险分析与契约设计

分析了供应商管理库存环境下,除双重边际效应以外另一个导致供应链分散决策时零售商订购量下降的因素,即道德风险问题。针对道德风险,采用求解完全且完美信息动态博弈中子博弈完美纳什均衡的一般方法,即逆推归纳法设计了一个数量折扣契约。当参数满足一定关系时,该契约不仅可以有效消除供应商管理库存中的道德风险,而且也使供销双方期望利润实现了帕累托改进,因此该契约不仅是有效的,而且也是可执行的。     

INFORMATION FRICTIONS AND HOUSING MARKET DYNAMICS

I examine the effects of seller uncertainty over their home value on the housing market. Using evidence from home listings and transactions data, I first show that sellers do not have full information about current period demand conditions for their homes. I incorporate this type of uncertainty into a dynamic microsearch model of the home selling problem with Bayesian learning. The estimated model highlights how information frictions help to explain the microdecisions of sellers and how these microdecisions affect aggregate market dynamics. The model generates a significant microfounded momentum effect in short‐run aggregate price appreciation rates.     

Capacity expansion and dynamic monopoly pricing

We substitute to the plant size problem, as investigated by Chenery [Chenery, H., 1952. Overcapacity and the acceleration principle. Econometrica], a new version in which a profit-maximizing monopolist may combine its investment policy with a price policy adjusting demand upwards or downwards over time. We characterize the optimal price and investment policies. The optimal price policy determines an investment pattern either with constant increments of capacity over time, or becoming constant after a finite time. The existing capacity is either fully used at each instant between two investment dates; or the monopolist first quotes the instantaneous monopoly price and, thereafter, the price dampening instantaneous demand at the optimal installed capacity level.     

PRICE DYNAMICS WITH CUSTOMER MARKETS

Using microdata from a U.S. retailer we document that customer turnover responds to pricing. We study the optimal price setting of a firm when its demand has an extensive margin that is elastic to price due to customers' opportunity to search for an alternative supplier. The price pass‐through of idiosyncratic productivity shocks is incomplete, with the most productive firms passing through more. Firm demand is more persistent than price. Higher demand is associated with lower markups due to higher search intensity, despite flexible prices. We find empirical support for these predictions in microdata from the retail industry.     

Peak load pricing under periodic and stochastic supply

The paper extends to the supply side previous work on peak load pricing embodying periodic and stochastic variations in demand. In a first step it introduces into the problem of periodic demand the additional problem of periodic capacity availability. Then it considers the general case where stochastic fluctuations enter both the demand and capacity availability sides. Welfare-maximising results suggest that off-peak consumers should be charged with capacity costs according to the loss-of-load probability in any period. This probability depends on periodic and random fluctuations in capacity availability. The optimal level of capacity is also affected by such fluctuations.     

Unidirectional transshipment policies in a dual-channel supply chain

The main purpose of this paper is to study the ordering, transshipment price, wholesale price and contracting decisions of a dual-channel supply chain with unidirectional transshipment. We establish a dual-channel model which consists of a manufacturer, an online shop owned by a manufacturer and a retailer. We first examine the ordering decisions and establish the existence of the pure strategy Nash equilibrium. Then we study other decisions under two types of transshipment price setting: exogenous and endogenous. Under exogenous transshipment price, we investigate the wholesale price decisions of the manufacturer. And then we find that the transshipment strategy with wholesale price contract can coordinate the supply chain only under a certain condition and cannot accommodate arbitrary divisions of the profit. So we further develop an all-unit quantity discount contract to coordinate the supply chain and achieve win–win outcome. Under endogenous transshipment price, we use Generalized Nash Bargaining Solution to study the transshipment price decisions and obtain a transshipment price mechanism. We find that the transshipment price mechanism always coordinates the supply chain.     

Coordination and price shocks: an empirical analysis

This paper outlines a new technique, which makes optimal control in a stochastic minimum variance framework computationally feasible. The new approach is then used to evaluate gains to policy coordination in the context of a macroeconometric model for the G-3. More specifically, we consider policy responses to a temporary price shock in a single country and in multi-country cases. The results show that coordination brings about a striking improvement in the overall control of inflation and a reduction in output costs.