Inventories, Stock-Outs and Production Smoothing

Inventories, Stock-Outs and Production Smoothing

If stock-outs are ignored and if demand shocks are additive, then optimal behaviour requires that the marginal cost of production (MC) be equated with the expected marginal revenue of increasing expected sales by one unit (EMR). However, with more general demand shocks (and still ignoring stock-outs), the excess of MC over EMR has the same sign as the covariance of the slope of the demand curve...

Creating Sales with Stock-outs*

Stock-outs convey information about the propensity of other consumers to purchase a product and this can increase the willingness of marginally interested consumers to buy. But in order to leverage stock-outs, firms must be able to capture the extra demand. We show how asymmetric inventory allocations to ex ante identical retailers may increase the expected satisfied demand compared to symmetri...

Inept drug supply management causing stock-outs.

Drug stock-outs: inept supply-chain management and corruption.

Spackling: Smoothing Make-to-Order Production of Custom Products with Make-to-Stock Production of Standard Items