Joint pricing and ordering decisions for a loss-averse retailer with quantity-oriented reference point effect and demand uncertainty: a distribution-free approach

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yue Yu ◽  
Ruozhen Qiu ◽  
Minghe Sun
Keyword(s):  
Expected Utility ◽  
Reference Point ◽  
Demand Uncertainty ◽  
Reference Level ◽  
Worst Case ◽  
Distribution Free ◽  
Content Type ◽  
Demand Distribution ◽  
Distribution Free Approach ◽  
Joint Pricing

PurposeThis work examines the joint pricing and ordering (JPO) decisions for a loss-averse retailer with quantity-oriented reference point (RP) effect under demand uncertainty.Design/methodology/approachThe demand is assumed to be uncertain with the mean and variance as the only known information. The prospect theory is used to model the retailer's expected utility. An expected utility maximization model in the distribution-free approach (DFA) is then developed. Using duality theory, the expected utility under the worst-case distribution is transformed into tractable piece-wise functions. To examine the effectiveness of the DFA in coping with the demand uncertainty, a stochastic programming model is developed and its solutions are used as benchmarks.FindingsThe proposed model and solution approach can effectively hedge against the demand uncertainty. The JPO decisions are significantly influenced by the LA coefficient and the reference level. The LA has a stronger influence than the reference level does on the expected utility. An excessive LA is detrimental while an appropriate reference level is beneficial to the retailer.Practical implicationsThe results of this work are applicable to loss-averse retailers with the quantity-oriented RP when making JPO decisions with difficulty in predicting the demands.Originality/valueThe demand is assumed to be uncertain in this work, but a certain demand distribution is usually assumed in the existing literature. The DFA is used to study JPO decisions for the loss-averse retailer with quantity-oriented RP effect under the uncertain demand.

scholarly journals An integrated supply chain inventory model with imperfect-quality items, controllable lead time and distribution-free demand

2013 ◽  
Vol 23 (1) ◽  
pp. 87-109 ◽  
Author(s):  
Hsien-Jen Lin
Keyword(s):  
Lead Time ◽  
Optimal Order ◽  
Total System ◽  
Screening Process ◽  
Defective Items ◽  
Distribution Free ◽  
System Cost ◽  
Demand Distribution ◽  
Production Run ◽  
Distribution Free Approach

In this paper, we consider an integrated vendor-buyer inventory policy for a continuous review model with a random number of defective items and screening process gradually at a fixed screening rate in buyer?s arriving order lot. We assume that shortages are allowed and partially backlogged on the buyer?s side, and that the lead time demand distribution is unknown, except its first two moments. The objective is to apply the minmax distribution free approach to determine the optimal order quantity, reorder point, lead time and the number of lots delivered in one production run simultaneously so that the expected total system cost is minimized. Numerical experiments along with sensitivity analysis were performed to illustrate the effects of parameters on the decision and the total system cost.

scholarly journals Joint Pricing and Purchasing Decisions for the Dual-Channel Newsvendor Model with Partial Information

2014 ◽  
Vol 2014 ◽  
pp. 1-12 ◽  
Author(s):  
Jixiang Zhou ◽  
Yong Wang ◽  
Xiaoming Yan
Keyword(s):  
Optimal Policy ◽  
Demand Uncertainty ◽  
Partial Information ◽  
Optimization Approach ◽  
Newsvendor Model ◽  
Worst Case ◽  
Clearing Functions ◽  
Dual Channel ◽  
Joint Pricing ◽  
Close Form

We investigate a joint pricing and purchasing problem for the dual-channel newsvendor model with the assumption that only the mean and variance of the demand are known. The newsvendor in our model simultaneously distributes a single product through traditional retail and Internet. A robust optimization approach that maximizes the worst-case profit is adapted under the aforementioned conditions to model demand uncertainty and linear clearing functions that characterize the relationship between demand and prices. We obtain a close-form expression for the robust optimal policy. Illustrative simulations and numerical experiments show the effects of several parameters on the optimal policy and on newsvendor performance. Finally, we determine that the gap between newsvendor performance under demand certainty and uncertainty is minimal, which shows that the robust approach can significantly improve performance.

scholarly journals Transfer of Risk in Supply Chain Management with Joint Pricing and Inventory Decision Considering Shortages

Mathematics ◽  
2021 ◽  
Vol 9 (6) ◽  
pp. 638
Author(s):  
Irfanullah Khan ◽  
Biswajit Sarkar
Keyword(s):  
Supply Chain ◽  
Supply Chain Management ◽  
Sensitivity Analyses ◽  
Selling Price ◽  
Distribution Free ◽  
Chain Management ◽  
Distribution Free Approach ◽  
Joint Pricing ◽  
Inventory Decision ◽  
The Cost

This study is the first to consider a distribution-free approach in a newsvendor model with a transfer of risk and back-ordering. Previously, in many articles, discrete demand is considered. In this model, we consider a newsvendor selling a single seasonal item with price-dependent stochastic demand. Competition in markets has forced the retailer and manufacturer to coordinate in decentralized supply chain management. A coordination contract is made between a retailer and manufacturer to overcome the randomness of demand for a short-life-cycle product. The retailer pays an additional amount per product to transfer the risk of unsold items. The manufacturer bears the cost of unsold products from the retailer. Shortages are allowed with back-ordering costs during the season. The distribution-free model is developed and solved with only available demand data of mean and standard deviation. Stackelberg’s game approach is used to calculate the optimal ordering quality and price. This model aims to maximize expected profit by optimizing unit selling price and ordered quantity through coordination. To illustrate that the model is robust, numerical experiment and sensitivity analyses are conducted for both decentralized and centralized supply chain management. For applicability of the model in the real-world business scenario, managerial insights are provided with sensitivity analysis.

Reliability and Accuracy of Bootstrap and Monte Carlo Methods for Demand Distribution Modeling

2011 ◽  
Author(s):  
Swithin S. Razu ◽  
Shun Takai
Keyword(s):  
Monte Carlo ◽  
Product Development ◽  
Conjoint Analysis ◽  
New Product Development ◽  
Demand Uncertainty ◽  
New Product ◽  
Product Development Process ◽  
Choice Data ◽  
Product Concept ◽  
Demand Distribution

Estimation of demand is one of the most important tasks in new product development. How customers come to appreciate and decide to purchase a new product impacts demand and hence profit of the product. Unfortunately, when designers select a new product concept early in the product development process, the future demand of the new product is not known. Conjoint analysis is a statistical method that has been used to estimate a demand of a new product concept from customer survey data. Although conjoint analysis has been increasingly incorporated in design engineering as a method to estimate a demand of a new product design, it has not been fully employed to model demand uncertainty. This paper demonstrates and compares two approaches that use conjoint analysis data to model demand uncertainty: bootstrap of respondent choice data and Monte Carlo simulation of utility estimation errors. Reliability of demand distribution and accuracy of demand estimation are compared for the two approaches in an illustrative example.

scholarly journals A New Method for Solving Multiobjective Bilevel Programs

2017 ◽  
Vol 2017 ◽  
pp. 1-10
Author(s):  
Ying Ji ◽  
Shaojian Qu ◽  
Zhensheng Yu
Keyword(s):  
Multiobjective Optimization ◽  
Demand Uncertainty ◽  
Pareto Optimum ◽  
Compact Set ◽  
Supply Chain Risk Management ◽  
Equilibrium Constraints ◽  
Supply Chain Risk ◽  
Worst Case ◽  
Bilevel Programs ◽  
Real World Problems

We study a class of multiobjective bilevel programs with the weights of objectives being uncertain and assumed to belong to convex and compact set. To the best of our knowledge, there is no study about this class of problems. We use a worst-case weighted approach to solve this class of problems. Our “worst-case weighted multiobjective bilevel programs” model supposes that each player (leader or follower) has a set of weights to their objectives and wishes to minimize their maximum weighted sum objective where the maximization is with respect to the set of weights. This new model gives rise to a new Pareto optimum concept, which we call “robust-weighted Pareto optimum”; for the worst-case weighted multiobjective optimization with the weight set of each player given as a polytope, we show that a robust-weighted Pareto optimum can be obtained by solving mathematical programing with equilibrium constraints (MPEC). For an application, we illustrate the usefulness of the worst-case weighted multiobjective optimization to a supply chain risk management under demand uncertainty. By the comparison with the existing weighted approach, we show that our method is more robust and can be more efficiently applied to real-world problems.

Road to default: Tracoma holding Berhad Bai Bithaman Ajil Debt securities (BaIDS)

2015 ◽  
Vol 5 (5) ◽  
pp. 1-6
Author(s):  
A.M. Hafizi ◽  
Shahida Shahimi ◽  
Mohd Hafizuddin Syah Bangaan Abdullah ◽  
M. Badrul Hakimi Daud
Keyword(s):  
Learning Outcomes ◽  
Capital Market ◽  
Credit Rating ◽  
Subject Area ◽  
Capital Requirements ◽  
Fund Raising ◽  
Case Scenario ◽  
Worst Case ◽  
Content Type ◽  
Analytical Skills

Subject area Islamic Finance and Investment Study level/applicability Level of program/audience: Advanced undergraduate and postgraduate. Courses Intermediate and Advanced Finance, Economics, Islamic Economics & Finance, Islamic Banking & Finance, Islamic Capital Market and other relevant courses. Specifictopics/syllabus Capital markets instruments, conventional or Islamic. Case overview This case focuses on Tracoma Holding Berhad Bai Bithaman Ajil Debt Securities (BaIDS) amounting to RM 100 million which was issued by Tracoma Holding Berhad in 2005. It was the first issuance of a sukuk (Islamic debt securities or bond) by the company. The proceeds were used to finance its growth and to repay existing bank borrowings and capital requirements. This case is interesting, as it allows students to study the bai bithaman ajil sukuk structure and issuance process in the Malaysian capital market. It also provides basic financial transaction and credit rating of sukuk which requires analytical skills. Being a debt-based facility, the sukuk was subjected to credit rating evaluation by the MARC, the rating agency appointed by the company. Further downgrading of the sukuk meant it would lead to the worst-case scenario. Some actions needed to be taken to solve this issue; therefore, the CFO suggested an urgent meeting with the sukuk holders. Expected learning outcomes The students should be able to: understand the issuance process and the principle of BBA (bai bithamin ajil) in sukuk structure; understand reason(s) methods of fund raising by firm and the allocations of fund; understand the sukuk default issue; analyze the reasons for sukuk default; understand the importance of debt securities credit ratings; and identify investors' protection in the case of sukuk default. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

scholarly journals The American Marketing Association

2014 ◽  
Vol 6 (4) ◽  
pp. 538-547 ◽  
Author(s):  
Franck Cochoy
Keyword(s):  
Reference Point ◽  
Design Methodology ◽  
Sociology Of Science ◽  
Sociological Analysis ◽  
Content Type ◽  
Common Reference ◽  
Coupling Procedure ◽  
Professional Body ◽  
History Of ◽  
Written Sources

Purpose – This paper aims to explore the sociological process behind the development of the American Marketing Association (AMA). It shows how the shift from isolated endeavors to an organized movement happened in marketing, how and why marketing pioneers merged to build a professional body and what this body provided to its community and to society at large. Design/methodology/approach – This paper studies the history of the AMA from the perspective of the sociology of science and relies on the marketing literature and other written sources. Findings – The paper shows that the AMA is both the result and the center of a coupling procedure. Isolated pioneers in the marketing field found it useful to communicate with those who were engaged in endeavors similar to their own. The meeting resulted in a dialog, and the dialog had necessitated the establishment of the AMA as a common reference point. The AMA provided the marketing community with a language and an institution that could help them to exist and move forward together. Originality/value – This paper provides an up to date account of the history of the AMA as well as a sociological analysis of its development.

Sprawl of the COVID-19 in changing scenario: a methodology based on social interaction

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gaurav Kumar ◽  
Akshay Kumar ◽  
Farhan Mohammad Khan ◽  
Rajiv Gupta
Keyword(s):  
Social Interaction ◽  
Design Methodology ◽  
Mitigation Strategy ◽  
Recent Past ◽  
Scenario Development ◽  
Worst Case ◽  
Content Type ◽  
Management Scheme ◽  
Business As Usual ◽  
Inter State

PurposeThere are several methods developed in the recent past to predict the spread of COVID-19 in different countries. However, due to changing scenarios in terms of interaction among people, none could predict the case close to the actual figures. An attempt to simulate people's interaction due to economic reopening concerning the confirmed cases at various places as per changing situation has been made. The scenario development method's base lies in the hypothesis that if there were no inter-state transportation during India's lockdown after May 24th, the number of infection cases would have started lowering down in a normalized progression.Design/methodology/approachThis study has developed three scenarios from the worst to the business-as-usual to the best in order to project the COVID-19 infections in India concerning infections observed from January 30th till May 24th, 2020, since the domestic flights became operational from May 25th, 2020, in India.FindingsBased on the observed cases till May 24th, the rise of cases is projected further in a random progression and superimposed to the normal progression. The results obtained in the three scenarios present that worst case needs complete lockdown, business-as-usual case needs regulatory lockdown and best case assures complete lockdown release by the second week of September 2020. This study suggests the preparedness and mitigation strategy for a threefold lockdown management scheme in all-inclusive.Originality/valueThe work has been done on a hypothesis which is solely original.

System dynamics modelling of fixed and dynamic Kanban controlled production systems: a supply chain perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jagan Mohan Reddy K. ◽  
Neelakanteswara Rao A. ◽  
Krishnanand Lanka ◽  
PRC Gopal
Keyword(s):  
Supply Chain ◽  
System Dynamics ◽  
Cycle Time ◽  
Production System ◽  
Demand Uncertainty ◽  
Production Systems ◽  
Decision Variable ◽  
Content Type ◽  
Pull Production ◽  
Kanban System

Purpose Pull production systems have received much attention in the supply chain management environment. The number of Kanbans is a key decision variable in the pull production system as it affects the finished goods inventory (FGI) and backorders of the system. The purpose of this study is to compare the performance of the fixed and dynamic Kanban systems in terms of operational metrics (FGI and backorders) under the demand uncertainty. Design/methodology/approach In this paper, the system dynamics (SD) approach was used to model the performance of fixed and dynamic Kanban based production systems. SD approach has enabled the feedback mechanism and is an appropriate tool to incorporate the dynamic control during the simulation. Initially, a simple Kanban based production system was developed and then compared the performance of production systems with fixed and dynamic controlled Kanbans at the various demand scenarios. Findings From the present study, it is observed that the dynamic Kanban system has advantages over the fixed Kanban system and also observed that the variation in the backorders with respect to the demand uncertainty under the dynamic Kanban system is negligible. Research limitations/implications In a just-in-time production system, the number of Kanbans is a key decision variable. The number of Kanbans is mainly depended on the demand, cycle time, safety stock factor (SSF) and container size. However, this study considered only demand uncertainty to compare the fixed and dynamic Kanban systems. This paper further recommends researchers to consider other control variables which may influence the number of Kanbans such as cycle time, SSF and container size. Originality/value This study will be useful to decision-makers and production managers in the selection of the Kanban systems in uncertain demand applications.

Sign in / Sign up

Export Citation Format

Share Document