We consider a manufacturer facing single period inventory planning problemwith uncertain demand and multiple options of expediting. The demand comes at a certain time in the future. The manufacturer may order the product in advance with a relatively low cost. She can order additional amount by expediting after the demand is realized. There are a number of expediting options, each of which corre...

We present a new dynamic programming formulation for the stochastic multi-stage serial inventory system based on the cost of sub-system with fewer stages. A heuristic based on judiciously selected common downstream holding costs requires solving one newsvendor problem per stage. A closed form approximate upper bound allows for accurate sensitivity analysis. 1

Monte Carlo sampling-based estimators of solution quality for stochastic programs are known to be biased. We present a method for reducing the bias of the estimators produced by the Averaged Two-Replication Procedure via a probability metrics approach, which can be done in polynomial time in sample size. We present analytic results for the newsvendor problem, and discuss further theoretical and...

In this paper we prove a sufficient maximum principle for general stochastic differential Stackelberg games, and apply the theory to continuous time newsvendor problems. In the newsvendor problem a manufacturer sells goods to a retailer, and the objective of both parties is to maximize expected profits under a random demand rate. Our demand rate is an Itô-Lévy process, and to increase realism i...

In the newsvendor problem, a decision maker chooses an inventory order quantity prior to the realization of a random demand. The decision maker faces a trade-off between ordering too many and having leftover inventory versus ordering too few and missing out on potential sales. Keeping the net profit structure constant, we study how the timing of the payments affects the inventory decisions. Spe...

We present a risk-averse multi-dimensional newsvendor model for a class of products whose demands are strongly correlated and subject to fashion trends that are not fully understood at the time when orders are placed. The demand distribution is known to be multimodal in the sense that there are spatially separated clusters of probability mass but otherwise lacks a complete description. We assum...

This study considers a supply chain that consists of n retailers, each of them facing a newsvendor problem, and a supplier. Groups of retailers might increase their expected joint profit by joint ordering and inventory centralization. However, we assume that the retailers impose some level of stock that should be dedicated to them. In this situation, we show that the associated cooperative game...

The optimal control of inventory in supply chains plays a key role in the competiveness of a corporation. The inventory cost can account for half of company’s logistics cost. The classical inventory models, e.g., newsvendor and EOQ models, assume either a single or infinite planning periods. However, these models may not be applied to perishable products which usually have a certain shelf life....

This paper contributes to the supply chain contracts literature in economics and operations by performing qualitative sensitivity analysis of a wholesale price contract in a two-echelon supply chain setting. Ordertheory tools are used to derive sufficient conditions for monotonicity of contract parameters. The upstream supplier is modeled as a Stackelberg leader. The supplier is assumed to have...

In this paper, we conduct a laboratory experiment using the classic newsvendor problem to examine cross-national differences in inventory ordering patterns between Chinese and American decision makers based on a theoretical examination of the role of the Doctrine of the Mean in Chinese decision making. Drawing on the theory of context-dependent preferences (specifically extremeness aversion), w...