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We consider a single-period assortment planning and inventory management problem for a retailer, using a locational choice model to represent consumer demand. We first determine the optimal variety, product location, and inventory decisions under static substitution, and show that the optimal assortment consists of products equally spaced out such that(More)
Inventory turnover varies widely across retailers and over time. This variation undermines the usefulness of inventory turnover in performance analysis, benchmarking and working capital management. We develop an empirical model using financial data for 311 public-listed retail firms for the years 1987-2000 to investigate the correlation of inventory(More)
We address the problem of hedging inventory risk for a short lifecycle or seasonal item when its demand is correlated with the price of a financial asset. We show how to construct optimal hedging transactions that minimize the variance of profit and increase the expected utility for a risk-averse decision-maker. We show that for a wide range of hedging(More)
I this paper we study how the time-series structure of the demand process affects the value of information sharing in a supply chain. We consider a two-stage supply chain model in which a retailer serves autoregressive moving-average (ARMA) demand and a manufacturer fills the retailer’s orders. We characterize three types of situations based on the(More)
We develop a model of consumer learning and choice behavior in response to uncertain service at the marketplace. Learning could be asymmetric, i.e., consumers may associate different weights with positive and negative experiences. Under this consumer model, we characterize the steady-state distribution of demand for retailers given that each retailer holds(More)
We describe a methodology by which a retailer can identify action steps that are likely to increase sales and customer satisfaction and demonstrate the methodology using proprietary data from a large retailer with over 500 stores. We use monthly store-level data on a number of operational variables including in-stock rate, store staffing level as measured(More)
Acknowledgments We would like to express our gratitude to and many other individuals at Wipro for their significant commitment of time and effort for this project. Special thanks are due to H. Kent Bowen for his advice and encouragement over the course of this project. We would also like to thank the special issue editors, consulting editor, and reviewers(More)
Given a finite set of products with varying prices and costs, stochastic demand and customer preferences, we consider the problem of determining the optimal assortment and inventory levels in order to maximize expected profit in a single-period. We model customer preferences through the definition of customer types, where a type is a ranking of the(More)
Retail store managers may not follow order advices generated by an automated inventory replenishment system if their incentives differ from the cost minimization objective of the system or if they perceive the system to be suboptimal. We study the ordering behavior of retail store managers in a supermarket chain to characterize such deviations in ordering(More)