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1 – 10 of over 12000Monami Das Roy and Shib Sankar Sana
This research work introduces an imperfect production system where the demand is assumed to be stochastic and it is influenced by random selling price. The shift time from an…
Abstract
Purpose
This research work introduces an imperfect production system where the demand is assumed to be stochastic and it is influenced by random selling price. The shift time from an “in-control” state to an “out-of-control” state is exponentially distributed. The accumulated inventory contains both perfect and defective items which are all sold with a free repair warranty (FRW) offer. Complete back ordering of shortages are taken into account. The purpose of this paper is to determine the optimal selling price and hence the optimal production lot size such that the expected profit is maximized.
Design/methodology/approach
The general model is discussed separately for both types of uniformly distributed selling price-sensitive demand pattern: additive type and multiplicative type. Numerical examples and graphical representations of the optimal solutions are provided to illustrate the models.
Findings
This paper helps the manager to manage future situations and it may be considered as a base work for the researchers to work in this direction.
Research limitations/implications
The main limitation of this model is to consider a single item for a single channel system. There are many correlated issues that need to be further investigated. The future study in this direction may include the consideration of multi-items, diverse demand pattern with different types of price distributions.
Originality/value
In the production inventory literature, plenty of articles are available considering imperfect production but none of them have considered selling price-sensitive stochastic demand where the sales price is random in character under an FRW offer.
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Vaibhav Chaudhary, Rakhee Kulshrestha and Srikanta Routroy
The purpose of this paper is to review and analyze the perishable inventory models along various dimensions such as its evolution, scope, demand, shelf life, replenishment policy…
Abstract
Purpose
The purpose of this paper is to review and analyze the perishable inventory models along various dimensions such as its evolution, scope, demand, shelf life, replenishment policy, modeling techniques and research gaps.
Design/methodology/approach
In total, 418 relevant and scholarly articles of various researchers and practitioners during 1990-2016 were reviewed. They were critically analyzed along author profile, nature of perishability, research contributions of different countries, publication along time, research methodologies adopted, etc. to draw fruitful conclusions. The future research for perishable inventory modeling was also discussed and suggested.
Findings
There are plethora of perishable inventory studies with divergent objectives and scope. Besides demand and perishable rate in perishable inventory models, other factors such as price discount, allow shortage or not, inflation, time value of money and so on were found to be combined to make it more realistic. The modeling of inventory systems with two or more perishable items is limited. The multi-echelon inventory with centralized decision and information sharing is acquiring lot of importance because of supply chain integration in the competitive market.
Research limitations/implications
Only peer-reviewed journals and conference papers were analyzed, whereas the manuals, reports, white papers and blood-related articles were excluded. Clustering of literature revealed that future studies should focus on stochastic modeling.
Practical implications
Stress had been laid to identify future research gaps that will help in developing realistic models. The present work will form a guideline to choose the appropriate methodology(s) and mathematical technique(s) in different situations with perishable inventory.
Originality/value
The current review analyzed 419 research papers available in the literature on perishable inventory modeling to summarize its current status and identify its potential future directions. Also the future research gaps were uncovered. This systemic review is strongly felt to fill the gap in the perishable inventory literature and help in formulating effective strategies to design of an effective and efficient inventory management system for perishable items.
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Dag Einar Sommervoll and Gavin Wood
This paper aims to study to what extent an insurance based on a house price index provides equity protection for homeowners.
Abstract
Purpose
This paper aims to study to what extent an insurance based on a house price index provides equity protection for homeowners.
Design/methodology/approach
The paper uses a novel dataset of all housing market transactions in the metropolitan area of Melbourne 1990‐2006, to construct repeated sales indices of various temporal spatial aggregation. These indices are used to discuss the efficiency of index‐based insurance schemes. The paper also considers efficiency under different specifications of legitimate claims.
Findings
It is found that the payout efficiency is surprisingly stable (around 50 percent) for all temporal spatial aggregations. A neighborhood index outperforms the metropolitan index with respect to target efficiency (the probability of payout given a loss). The introduction of maturity times, say legitimate claim five years after purchase, does improve efficiency somewhat. However, the idiosyncratic component of housing market transactions remains high, and the insurance probably unattractive from a homeowner perspective.
Originality/value
To the authors' knowledge, this is the first time an index‐based insurance scheme is analyzed using real‐market transactions.
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It is now over 35 years since Professor Shackle published his masterly Expectation in Economics, therein formalising and synthesising his innovative work of the previous decade…
Abstract
It is now over 35 years since Professor Shackle published his masterly Expectation in Economics, therein formalising and synthesising his innovative work of the previous decade. Since then, though in varying degrees, controversy has raged over the relevance of his ideas for economic theory, and over the relevance of economic theory for economic life.
Agricultural risks will tend to increase in the future, but risk management instruments and techniques at the disposal of wine companies are relatively limited. This paper aims to…
Abstract
Purpose
Agricultural risks will tend to increase in the future, but risk management instruments and techniques at the disposal of wine companies are relatively limited. This paper aims to present an original risk protection mechanism implemented by the federation of Côte du Rhône (Inter‐Rhône) wine producers to build up a wine stock, or “reserve”, so as to protect their incomes against fluctuation in prices and production.
Design/methodology/approach
Using the VaR (value‐at‐risk) methodology, the stock level that will protect producers against a fall in their incomes is determined. More specifically, the probability that a given producer's current income falls lower than a target minimum income must be inferior or equal to a given (small) wine stock level. An agricultural income depends on price and production, so the reserve amount is expressed according to price and production quantity risk (measured by standard deviation), and the correlation between the two. The wine stock reserve is compared with a reserve invested in financial assets.
Findings
A static comparative analysis is made using simulations of the two types of reserves (wine stock and financial assets) according to the various explanatory variables. Empirical study makes it possible to calculate reserve amounts for each category of wine managed by Inter‐Rhône. The study reveals a strong disparity in the amount of reserves of each wine.
Originality/value
The reserve system is considered by some to give to the producer federation the power to control supply below the equilibrium level in order to receive monopoly rents. To avoid this occurring the constitution of a mutual fund is recommended. This solution allows producers to profit from diversification gains and greater managerial flexibility.
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Niloofar Zamani, Maryam Esmaeili and Jiang Zhang
This study aims to examine the value of the call option contract in hedging the risks in the supply chain. The decentralized supply chain without call option contract is first…
Abstract
Purpose
This study aims to examine the value of the call option contract in hedging the risks in the supply chain. The decentralized supply chain without call option contract is first studied as the criterion model for evaluations. This paper addresses several questions: What will be the optimal manufacturer’s production quantity, retailer’s ordering and pricing policies in the presence of random demand and random yield by applying the downconversion approach? How will the call option contract influence the optimal decisions for the members of the supply chain? Can the risk from randomness be divided among the members in the supply chain through the call option contract?
Design/methodology/approach
This paper considers a two-level decentralized supply chain under random yield and random demand in which the manufacturer takes advantage of the downconversion approach with two scenarios, with and without option contract. To the best of the authors’ knowledge, no article or study uses the downconversion approach in a supply chain regarding random yield and random demand. Furthermore, the paper considers pricing with option contract in the supply chain, which makes this article stands out significantly from other articles in the literature.
Findings
This study shows that the downconversion approach would reduce the risk caused by the random yield, which appears to be the appropriate method for the environmental goal of the supply chains. Moreover, adopting a call option contract can increase flexibility and mitigate risks, resulting in more expected members’ profits.
Research limitations/implications
To simplify the model, the authors assume one manufacturer and one retailer, so extending the model to consider multiple retailers instead of one retailer and inventory sharing between them would be interesting. Considering the option and exercise prices as decision variables would be important future research topics. Put option and bidirectional option contracts could be investigated in the future. Another extension is modeling asymmetry of information in supply chain.
Originality/value
This paper provides managerial insights on dealing with both demand and yield risks in a manufacturer–retailer supply chain. The manufacturer has a random yield production and produces two types of vertical products: low-end and high-end. To reduce waste caused by the random yield, the manufacturer uses a downconversion approach in which low-end products are made by converting the defective high-end products. The manufacturer purchased a shortage of high-end products from the secondary market (i.e. emergency sourcing). High-end products are sold through the retailer, and low-end products are sold directly by the manufacturer. The customer demand for high-end products in the end market is random and depends on the selling price, and the customer demand for the low-end products in the secondary market is independent and random. The retailer contracts the manufacturer with the call option to obtain high-end products to meet a random demand; in fact, by using the call option contract, the authors try to balance the risks between two members. Two scenarios of with and without call option contract are proposed. After the high-end product demand is observed, the retailer would exercise the option order quantity in the call option contract scenario and then place an instant order with the manufacturer if necessary. In each scenario, the manufacturer and the retailer make their decisions simultaneously (static game) to determine the retailer’s optimal ordering and pricing policies and the optimal production quantity of the manufacturer (Nash equilibrium) by maximizing their expected profits. Finally, the impact of the model parameters on the supply chain is expressed through numerical examples. The numerical analysis shows that the call option contract provides greater profit than the wholesale price contract.
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Kuntara Pukthuanthong, Lee R. Thomas Lee R. Thomas III and Carlos Bazan
Recent research indicates that the random walk hypothesis (RWH) approximately describes the behavior of major dollar exchange rates during the post‐1973 float. The present…
Abstract
Purpose
Recent research indicates that the random walk hypothesis (RWH) approximately describes the behavior of major dollar exchange rates during the post‐1973 float. The present analysis seeks to examine the profitability of currency futures trading rules that assume that spot exchange rates can be adequately modeled as a driftless random walk.
Design/methodology/approach
Two random walk currency futures trading rules are simulated over all available data from the period 1984‐2003. In both cases, the investor buys currencies selling at a discount and sells those selling at a premium, as the RWH implies. The two rules differ only in the way they allocate the hypothetical investor's resources among long and short foreign currency positions.
Findings
Results show that an investor who used these trading strategies over the past decade would have enjoyed large cumulative gains, although periods of profit were interrupted by periods of substantial loss.
Research limitations/implications
The findings encourage the hope that profitable random‐walk‐based strategies for currency futures trading can be devised. The simulation results have important implications for those willing to hedge, borrowers, and speculators.
Originality/value
This paper provides evidence that purchasing futures contracts on currencies priced at a discount and selling futures contracts priced at a premium has generally been a profitable trading strategy during the last two decades of floating exchange rates.
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Contemporary literature reveals that, to date, the poultry livestock sector has not received sufficient research attention. This particular industry suffers from unstructured…
Abstract
Contemporary literature reveals that, to date, the poultry livestock sector has not received sufficient research attention. This particular industry suffers from unstructured supply chain practices, lack of awareness of the implications of the sustainability concept and failure to recycle poultry wastes. The current research thus attempts to develop an integrated supply chain model in the context of poultry industry in Bangladesh. The study considers both sustainability and supply chain issues in order to incorporate them in the poultry supply chain. By placing the forward and reverse supply chains in a single framework, existing problems can be resolved to gain economic, social and environmental benefits, which will be more sustainable than the present practices.
The theoretical underpinning of this research is ‘sustainability’ and the ‘supply chain processes’ in order to examine possible improvements in the poultry production process along with waste management. The research adopts the positivist paradigm and ‘design science’ methods with the support of system dynamics (SD) and the case study methods. Initially, a mental model is developed followed by the causal loop diagram based on in-depth interviews, focus group discussions and observation techniques. The causal model helps to understand the linkages between the associated variables for each issue. Finally, the causal loop diagram is transformed into a stock and flow (quantitative) model, which is a prerequisite for SD-based simulation modelling. A decision support system (DSS) is then developed to analyse the complex decision-making process along the supply chains.
The findings reveal that integration of the supply chain can bring economic, social and environmental sustainability along with a structured production process. It is also observed that the poultry industry can apply the model outcomes in the real-life practices with minor adjustments. This present research has both theoretical and practical implications. The proposed model’s unique characteristics in mitigating the existing problems are supported by the sustainability and supply chain theories. As for practical implications, the poultry industry in Bangladesh can follow the proposed supply chain structure (as par the research model) and test various policies via simulation prior to its application. Positive outcomes of the simulation study may provide enough confidence to implement the desired changes within the industry and their supply chain networks.
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Mark DeSantis, Matthew McCarter and Abel Winn
The authors use laboratory experiments to test two self-assessment tax mechanisms for facilitating land assembly. One mechanism is incentive compatible with a complex tax…
Abstract
The authors use laboratory experiments to test two self-assessment tax mechanisms for facilitating land assembly. One mechanism is incentive compatible with a complex tax function, while the other uses a flat tax rate to mitigate implementation concerns. Sellers publicly declare a price for their land. Overstating its true value is penalized by using the declared price to assess a property tax; understating its value is penalized by allowing developers to buy the property at the declared price. The authors find that both mechanisms increase the rate of land assembly and gains from trade relative to a control in which sellers’ price declarations have no effect on their taxes. However, these effects are statistically insignificant or transitory. The assembly rates in our self-assessment treatments are markedly higher than those of prior experimental studies in which the buyer faces bargaining frictions, such as costly delay or capital constraints.
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The paper aims to study a strategy of advance selling with part payment (ADP) in which pre-ordering consumers are required to pay a portion of advance price first and then pay the…
Abstract
Purpose
The paper aims to study a strategy of advance selling with part payment (ADP) in which pre-ordering consumers are required to pay a portion of advance price first and then pay the rest in the spot period to complete the order. The authors compare the ADP strategy with strategies of advance selling with full payment (ADF) and no advance selling (NA) from the perspective of sellers.
Design/methodology/approach
The paper proposes a two-period pricing model with price-off promotion in the first period for a market consisting of consumers and a single seller. For each strategy (i.e. NA, ADF and ADP), solutions to the seller’s optimal order quantity in the spot period, optimal advance price and prepayment in the advance period are derived by backward conduction. Numerical study is also used to obtain straightforward insights.
Findings
Advance price of ADF is lower than that of ADP. Order quantity of ADF is higher than that of ADP. ADP brings more profit than the other two selling strategies, i.e. NA and ADF, when ADP’s implementing conditions are satisfied. While ADF is effective only when unit cost is low, ADP is applicable irrespective of whether the cost is low.
Originality/value
Existing researchers on advance selling mainly focus on the ADF strategy. The paper pays attention to different payment mechanisms in advance selling and steps further to propose a new form of advance selling, i.e. the ADP strategy. The effects of ADP on consumer’s purchasing behavior and seller’s marketing decisions are analyzed.
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