This paper addresses the problem of inventory penalty pricing under the risk-neutral valuation principle. The underlying production-inventory system has a constant replenishment rate and a compound renewal demand stream (i.e., iid demand interarrival times are independent of iid demand sizes), and is subject to underage and overage penalties. Our pricing approach treats the penalties as a serie...

For several decades, economists have used the annual demand for trips in order to measure the nonmarket value of recreation sites. Two features of trip demand functions complicate their estimation: trip demand is nonnegative and occurs in integer quantities. The fact that trip demand cannot be negative results in a censored (at zero) data set; failure to account for censoring leads to biased es...

Organizations with large-scale inventory systems typically have a large proportion of items for which demand is intermittent and low volume. We examine different approaches to forecasting for such products, paying particular attention to the need for inventory planning over a multi-period lead-time when the underlying process may be nonstationary. This emphasis leads to consideration of predict...

As the requirement of task is dynamical, the usage of equipment will change with time and it will result in the fluctuating demand for spare parts all over the time. In order to improve equipment performance, the users need to forecast equipment failure frequency and demand for spare parts within the task period. Demand in a moment of task period is the result of cumulative effect of the failur...

This paper presents an analytical model for computing the stationary distribution of the on-hand inventory in a continuous-review inventory system with compound Poisson demand, Erlang distributed lead time, and lost sales, where the supplier can assume one of the two “available” and “unavailable” states at any point in time according to a continuous-time Markov chain. Exact analytical expressio...

We examine sensitivity of estimates of recreation demand using the Travel Cost Method (TCM) to four factors. Three of the four have been routinely and widely discussed in the TCM literature: a) Poisson verses negative binomial regression; b) application of Englin correction to account for endogenous stratification; c) truncation of the data set to eliminate outliers. A fourth issue we address h...

s-This paper further extends the existing cost model for a fixed-life perishable product in a two-echelon inventory problem into the net profit model. The extended model is subsequently evaluated by comparing its results with those obtained from OptQuest, a commercial simulationoptimization package. Within a limited but reasonable time, the comparative results do not show a significant improvem...

This paper investigates demand forecast and order placement policy of a seasonal product for the retailers in an active business season. In a two-phase demand model, the market demand is uncertain, and decision-making for order placement is addressed for the second phase after observing the demand at the first phase during the active season. The model uses a Poisson process for customer demand ...