In this paper, we examine the nature of optimal inventory policies in a system where a retailer manages substitutable products. We first consider a system with two products 1 and 2 whose total demand is D and individual demands are negatively correlated. A fixed proportion of the unsatisfied...

We study the following question: How does competition influence the inventory holdings of General Motors' dealerships operating in isolated U.S. markets? We wish to disentangle two mechanisms by which local competition influences a dealer's inventory: (1) the entry or exit of a competitor can...

An increasing number of manufacturers have started to pursue a strategy that promotes inventory sharing among the dealers in their distribution network. In this paper we analyze a decentralized dealer network in which each independent dealer is given the flexibility to share his inventory. We...

We develop a model of consumer learning and choice behavior in response to uncertain service in the marketplace. Learning could be asymmetric, that is, consumers may associate different weights with positive and negative experiences. Under this consumer model, we characterize the steady-state...

Under a revenue-sharing contract, a retailer pays a supplier a wholesale price for each unit purchased, plus a percentage of the revenue the retailer generates. Such contracts have become more prevalent in the videocassette rental industry relative to the more conventional wholesale price...

The global markets of today offer to the "style goods" producer more selling opportunities and pose new challenges in production planning and coordination. From a production management standpoint the opportunity to exploit the difference in timing of the selling season of geographically...

This paper examines inventory management from an incentive perspective. We show that when a manager has private information about future attainable revenues, the residual income performance measure based on historical cost can achieve optimal (second-best) incentives with regard to managerial...

In this paper, we examine two information-based supply-chain efforts that are often linked to Vendor-Managed Inventory (VMI) programs. Specifically, we consider a supplier serving multiple retailers located in a close proximity. The first effort uses information on the retailers' inventory...

To motivate buyers to increase their order quantity, suppliers often rely on a well-established and widely used approach--they offer quantity discounts. This practice is in large part driven to obtain improved economies in transportation through higher truckload utilization. Recently,...

In this paper, we study the impact of coordinated replenishment and shipment in inventory/distribution systems. We analyze a system with multiple retailers and one outside supplier. Random demand occurs at each retailer, and the supplier replenishes all the retailers. In traditional inventory...