Using the Pack‐and‐a‐Half Rule to Eliminate Backroom Inventories in Retail Operations

In the retail industry, backroom inventories are typically associated with higher labor costs and greater operational complexity. Thus, retailers look for ways to eliminate backroom inventories. A heuristic used for this purpose is the pack‐and‐a‐half rule which suggests that the shelf space allocated for a product should be at least 50% larger than the case pack quantity in which the product is delivered. Despite its popularity among retailers, the pack‐and‐a‐half rule has been ignored in the academic literature. We introduce the pack‐and‐a‐half rule, assess its impact on a retailer's profits, identify cost, demand, and product characteristics driving this impact, and propose a modification. Based on an analysis of data obtained from a retailer on 1,986 SKUs in 20 categories, we find that the pack‐and‐a‐half rule decreases a retailer's profits, on average, by 10% when applied uniformly across all SKUs. Further, this decrease is significantly affected by product depth, product width, demand elasticity, case pack quantity, and inventory carrying cost. Finally, we develop a set of modifications based on these variables where the pack‐and‐a‐half rule is applied selectively and in a stepwise fashion. These modifications limit the decrease in a retailer's profits to a range between 6% and 7%.     

The interaction of retail density and music tempo: Effects on shopper responses

Research examining the effects of store environment on shoppers has found that a number of atmospheric cues have significant effects on shoppers' cognitive, affective, and behavioral responses. To date, retail atmospheric cues have been studied in isolation, instead of simultaneously, like they occur in the retail setting. This study examines the interactive effects of two atmospheric cues—retail density and music tempo—and their impact on shopper responses within a real shopping environment. Based on the schema incongruity model, it is found that shopper hedonic and utilitarian evaluations of the shopping experience are highest under conditions of slow music/high density and fast music/low density. Significant main effects of music tempo are found for behavioral responses such as approach/avoidance tendency and extent of browsing behavior. The results underscore the need to examine interactive effects of atmospheric cues to better understand the impact of the store environment on shoppers. © 2005 Wiley Periodicals, Inc.     

EXPLORING THE POTENTIAL EFFECTS OF FORECASTER MOTIVATIONAL ORIENTATION AND GENDER ON JUDGMENTAL ADJUSTMENTS OF STATISTICAL FORECASTS

The growing adoption of demand collaboration initiatives such as Collaborative Planning, Forecasting, and Replenishment (CPFR) has made judgmental adjustments of forecasts, an already widespread forecasting practice, an increasingly routine part of many logistics managers' responsibilities. This article investigates how logistics managers might improve forecast accuracy by judgmentally adjusting statistical forecasts and potential factors that may influence the effectiveness of such adjustments. In particular, our goal is to expand current knowledge in this area by focusing on individual differences, specifically motivation and gender, which have been thus far neglected in the extant literature. Our findings indicate that motivation has a significant effect on accuracy improvement and this relationship is moderated by gender. Managerial implications of these findings and future research opportunities are also presented.     

Proactive planning for catastrophic events in supply chains

Supply chains are increasingly vulnerable to catastrophic events such as hurricanes or terrorist attacks. This is not only true because firms are more exposed to catastrophes, but also the result of investments made in recent years to operate supply chains with fewer human and capital resources, especially inventory. Consequently, there is today less “slack” available in supply chains to deal with catastrophic events. Thus, proactively planning for these types of events should be a priority for supply chain managers. A catastrophic event has a very low probability of occurrence but has significant consequences if it does occur. The goal of this research is to develop a process to proactively plan for catastrophic risk events through an integration of diverse research streams related to the management of risk. In particular, the proposed process builds upon an existing risk analysis framework by incorporating an innovative methodology used by the insurance industry to quantify the risk of multiple types of catastrophic events on key supply chain locations.     

Stock Market Reaction to Quality,Safety, and Sustainability Awards in Logistics

Although quality, safety, and sustainability are important concerns in logistics, managers are sometimes reluctant to invest in these areas because it is not always clear how such investments will benefit firm performance. Empirical literature provides little guidance in the context of logistics as previous studies report mixed findings across a diverse set of industries, which may not be directly applicable to logistics. To address this gap, we conducted an event study to estimate the stock market reaction to quality, safety, and sustainability award announcements in logistics. Based on 244 award announcements during the period 2004–13, we found that stock market participants react positively to announcements of these awards. The market reaction appears to be stronger for sustainability awards than for quality and safety awards. Our results also suggest that the market reacts more favorably to quality and sustainability award announcements for firms with better past financial performance and for smaller firms.     

Leisure book reading and purchasing: an analysis of Turkish consumers

Tracking studies all over the world report a decline in time devoted to reading in all age groups. There is a common stereotype indicating that people prefer other leisure activities to reading books. Low levels of book readership and book purchasing has always been a matter of discussion in Turkey. Accordingly, the aim of this study was to develop a better understanding of Turkish people’s involvement with books. To achieve this aim, a research survey via self‐administered questionnaire to collect data about leisure time reading, book purchasing and related attitudes was prepared. The sample represents 601 people from eight cities. It was found that around 80% of the sample had read at least one book within the last 6 months, and 58% had purchased a book for her‐ or himself. In addition, a Likert scale with 26 items was utilized to understand the attitudes of respondents to book reading, purchasing and book marketing activities. A factor analysis was also used to check the possibility of reducing the number of attitude items on the scale. Four factors emerged as a result of the factor analysis, labelled as ‘high involvement in books’, ‘preference towards more visual products’, ‘economy factor’ and ‘books must be heavily promoted’. Furthermore, ANOVA and t‐tests were performed to analyse whether attitudes change with demographic variables. Contrary to common beliefs about book readership, this study has revealed favourable attitudes towards book reading and purchasing.     

Investigating the effects of economies of scope on firms’ pricing behavior: Empirical evidence from the US domestic airline industry

This study investigates to what extent cross-product (belly cargo) output affects (passenger ticket) prices in the US domestic airline industry. The empirical analysis indicates that greater cargo volumes generally result in lower air fares, presumably as a result of the airlines’ realization of economies of scope. This magnitude of this price effect, however, depends on certain firm and route market characteristics. The findings of this study add to extant research on economies of scope, multi-product yield management and airline pricing and provide important insights for policy makers and airline managers alike.     

The fluent online shopping experience

Consumers increasingly use various Internet-enabled devices for online shopping; thus, a critical topic for both research and practice is the visual characteristics of the information presented in this medium. This study builds on fluency theory within an environmental psychology framework. Specifically, this research examines how consumers' perceived fluency of the verbal online information affects their perceived cognitive effort and positive affect within a choice context. The experimental results show that (1) perceptual fluency affects both cognitive effort and positive affect experienced during online shopping and (2) cognitive effort and positive affect influence judgments about the perceived decision quality of the choice made. This research is notable in its simultaneous (as opposed to consecutive) examination of the relationship among the three dimensions of processing fluency (perceptual fluency, positive affect, and cognitive effort) and their impact on consumers' choice satisfaction with an online shopping task.     

Human versus spatial dimensions of crowding perceptions in retail environments: A note on their measurement and effect on shopper satisfaction

Perceived retail crowding was originally conceptualized as having two dimensions, but subsequent empirical work in marketing has treated the construct unidimensionally. This paper reports a series of lab and field studies that examine the dimensionality of the construct and its relationship to store satisfaction. Two alternative crowding measures are tested. Results suggest that perceived retail crowding has distinct human and spatial dimensions that affect satisfaction differently.