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This article has been withdrawn as it was published elsewhere and accidentally duplicated. The original article can be seen here: 10.1108/09600039610108557. When citing the article, please cite: Jess S. Boronico, Dennis J. Bland, (1996), “Customer service: the distribution of seasonal food products under risk”, International Journal of Physical Distribution & Logistics Management, Vol. 26 Iss: 1, pp. 25 - 39.

Ramsey‐Boiteaux pricing to services offering limited deferability subject to reliability constraints with a specific application to postal services has been investigated by the first of the above authors in. The general results derived in his paper involve welfare‐optimal pricing for a monopolist faced with stochastic demands which impact both demand and cost. These stochastic demands are modeled by probability distributions with fixed parameters. In this paper we extend this approach to the case where the model parameters are not known with certainty. This uncertainty is dealt with by representing the distribution parameters as fuzzy sets in which the membership of a particular value in the fuzzy set represents the degree of belief associated with this parameter value. This approach requires the solution of a system of nonlinear equations for each possible combination of parameter values, and the result is a fuzzy solution vector. This solution vector is then defuzzified to obtain a specific solution to the problem. As in, we illustrate our approach with an application of welfare‐optimal pricing in the context of postal services. Section I reviews relevant literature and discusses the nature of postal services. The problem statement together with general results are presented in Section II, and applied to a postal service problem in Section III. These results are further illustrated via numerical example in section IV. Conclusions are presented in Section V.

Type of article Theoretical with worked example

Addresses important logistical considerations in the distribution of a seasonal food product. While continued attempts have been made to maintain high levels of customer service within the food industry, the degree of uncertainty in the distribution channel itself often undermines management’s efforts to procure adequate stock of product during peak demand season. Develops a stochastic dynamic programming formulation which may serve as a decision‐support tool for managers faced with procuring product in a distribution channel in which receipt quantities are probabilistic. Provides numerical results, supporting the intuitive result that expected costs and the length of the required planning horizon are inversely related to the level of uncertainty in the distribution channel.

Addresses important logistical considerations in the distribution of a seasonal food product. While most organizations recognize that quality affects both demand and cost, the degree of uncertainty in the distribution channel itself, which impacts quality through management’s efforts to procure adequate stock of product during peak demand, must also be considered. Develops a stochastic dynamic programming formulation from which budget‐constrained order quantities may be determined. Shows that the distribution and timing of orders impacts on quality, which is measured by the shortage probability over the multiple period planning horizon. Provides a numerical example from which optimal solutions are obtained. Provides a basic framework from which decision support tools may be developed to assist in procuring a product in a distribution channel where receipt quantities are probabilistic.

The 1980s and 1990s have seen competition emerge within industries traditionally imbued with monopoly status, for instance, the field of telecommunications. Within these industries, increased competition and the threat of the removal of statutory monopoly has resulted in greater awareness regarding the impact of quality on service and efficient pricing. Discusses, as an example, postal services, an industry of immense importance worldwide, suggests that the emphasis postal services place on the implementation of both timely and reliable service and competitive prices will inherently determine the success they will have withstanding the ever growing threat of international and national competition. While postal services and public utilities share similar peak‐load problems as discussed in the traditional natural monopoly literature, limited deferrability of mail service, together with service differentiated pricing, yields a framework sufficiently different so as to warrant a separate analysis. Presents a model which considers this analysis by developing welfare‐optimal prices, reliabilities and capacities under conditions of stochastic demand subject to reliability constraints on service quality and a minimum profit Ramsey constraint.

Reports the results of an empirical investigation conducted for the purposes of exploring the issue of unit selection and the sales comparison approach. The proximate motivation of this study was in determining how non‐reinforcing appraisal estimates may be addressed. The investigation proceeds by exploring two possible criteria through which the reliability of appraisal estimates may be measured. The first involves the percentage error made in price per unit of comparison (UOC), while the second concerns the total valuation error in the appraisal of real property. Results involve the utilization of the coefficient of variation and the Markov inequality, and may assist appraisers when different units of comparison yield non‐reinforcing estimates of value. It is shown that maximum confidence in guaranteeing that the percentage error between the estimated and actual price per UOC lies within a tolerance level chosen ex‐ante obtains through choosing the UOC with the minimum coefficient of variation. Total valuation error is minimized as a function of the standard deviation for the price per UOC, the sample size, and the UOC’s value for the real property being appraised. While minimum per unit percentage error may be obtained utilizing a particular UOC, the minimization of total valuation error may imply the utilization of an alternative unit. It is shown for the empirical analysis conducted, that when two common units of comparison are considered ‐ acreage and front footage ‐ both percentage and total valuation error were minimized through the use of price per acre rather than price per front foot.