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Scheller College of Business

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https://hdl.handle.net/1853/70690

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Office of the Provost and Executive Vice President for Academic Affairs

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Institute for Leadership and Social Impact

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https://finding-aids.library.gatech.edu/agents/corporate_entities/255

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Publication Search Results

Now showing 1 - 10 of 62

A Simple and Robust Batch-Ordering Inventory Policy Under Incomplete Demand Knowledge

( 2005-12-16) Ferguson, Mark E. ; Bai, Liwei ; Alexopoulos, Christos ; Tsui, Kwok-Leung

Generally, the derivation of an inventory policy requires the knowledge of the underlying demand distribution. Unfortunately, in many settings such as retail, demand is not completely observable in a direct way or inventory records may be inaccurate. A variety of factors, including the potential inaccuracy of inventory records, motivate retailers to seek replenishment policies with a fixed order quantity. We derive estimators of the first two moments of the (periodic) demand by means of renewal theoretical concepts. We then propose a regression-based approximation to improve the quality of the estimators. These estimators are used in conjunction with the Power Approximation (PA) method of Ehrhardt and Mosier (1984) to obtain an (r, Q) replenishment policy. The proposed methodology is robust and easy to code into a spreadsheet application. A series of numerical studies are carried out to evaluate the accuracy and precision of the estimators, and to investigate the impact of the estimation on the optimality of the inventory policies. Our experiments indicate that the proposed (r, Q) policy is very close, with regard to the mean total cost per period, to the (s, S) policy obtained via the PA method when the demand process is fully observable.
How Should a Firm Manage Deteriorating Inventory? (ed.3)

(Georgia Institute of Technology, 2005-12-15) Ferguson, Mark E. ; Koenigsberg, Oded

Firms selling goods whose quality level deteriorates over time often face difficult decisions when unsold inventory remains. Since the leftover product is often perceived to be of lower quality than the new product, carrying it over offers the firm a second selling opportunity and an ability to price discriminate. By doing so, however, the firm subjects sales of its new product to competition from the leftover product. We present a two period model that captures the effect of this competition on the firm’s production and pricing decisions. We characterize the firm’s optimal strategy and find conditions under which the firm is better off carrying all, some, or none of its leftover inventory. We also show that, compared to a firm that acts myopically in the first period, a firm that takes into account the effect of first period decisions on second period profits will price its new product higher and stock more of it in the first period. Thus, the benefit of having a second selling opportunity dominates the detrimental effect of cannibalizing sales of the second period new product.
A Comparison of Unconstraining Methods to Improve Revenue Management Systems (ed.1)

( 2005-12-07) Ferguson, Mark E. ; Crystal, Carolyn Roberts ; Higbie, Jon ; Kapoor, Rohit

A successful revenue management system requires accurate demand forecasts for each customer segment. These forecasts are used to set booking limits for lower value customers to ensure an adequate supply for higher value customers. The very use of booking limits, however, constrains the historical demand data needed for an accurate forecast. Ignoring this interaction leads to substantial penalties in a firm's potential revenues. We review existing unconstraining methods and propose a new method that includes some attractive properties not found in the existing methods. We evaluate several of the common methods used to unconstrain historical demand data against our proposed method by testing them on intentionally constrained simulated data. Results show our proposed method along with the Expectation Maximization (EM) method perform the best. We also test the revenue impact of our proposed method, EM, and “no unconstraining” on actual booking data from a hotel/casino. We show that performance varies with the initial starting protection limits and a lack of unconstraining leads to significant revenue losses.
The Classification of Cash Flows from Collections of Retained Interests Related to Securitizations of Customer-Related Receivables

(Georgia Institute of Technology, 2005-11) Mulford, Charles W. ; Thomson, Elizabeth ; Mayoor, Joshi ; Shkonda, Konstantin

When receivables are securitized, the sponsoring company typically continues to hold an interest, referred to as a retained interest, in the underlying pool of receivables. Retained interests may be considered to be securities that the firm classifies as being held for trading, available-for-sale, or held-to-maturity purposes. Depending on whether or not they are considered to be securities and how those securities are classified, cash flows arising when retained interests are collected may be reported as components of either investing or operating activities. Collections of retained interests arising from securitizations of customer-related receivables are in-substance operating cash flow and are best considered as such for purposes of analysis. In this study, we examine reporting practices for retained interests arising when customer-related receivables are securitized. We propose adjustments to operating cash flow when proceeds received from retained interests are reported as investing cash flow.
Supply chain coordination for false failure returns (ed.3)

(Georgia Institute of Technology, 2005-11) Ferguson, Mark E. ; Guide, V. Daniel R., Jr. ; Souza, Gilvan C.

False failure returns are products that are returned by consumers to retailers with no functional or cosmetic defect. The cost of a false failure return includes the processing actions of testing, refurbishing if necessary, repackaging, the loss in value during the time the product spends in the reverse supply chain (a time that can exceed several months for many firms), and the loss in revenue because the product is sold at a discounted price. This cost is significant, and is incurred primarily by the manufacturer. Reducing false failure returns, however, requires effort primarily by the retailer, for example informing consumers about the exact product that best fits their needs. We address the problem of reducing false failure returns via supply chain coordination methods. Specifically, we propose a target rebate contract that pays the retailer a specific dollar amount per each unit of false failure returns below a target. This target rebate provides an incentive to the retailer to increase her effort, thus decreasing the number of false failures and (potentially) increasing net sales. We show that this contract is Pareto–improving in the majority of cases. Our results also indicate that the profit improvement to both parties, and the supply chain, is substantial.
Information Sharing to Improve Retail Product Freshness of Perishables (ed.3)

(Georgia Institute of Technology, 2005-11) Ferguson, Mark E. ; Ketzenberg, Michael E.

We explore the value of information (VOI) in the context of a retailer that provides a perishable product to consumers and receives replenishment from a single supplier. We assume a periodic review model with stochastic demand, lost sales, and order quantity restrictions. The product lifetime is fixed and deterministic once received by the retailer, although the age of replenished items provided by the supplier varies stochastically over time. Since the product is perishable, any unsold inventory remaining after the lifetime elapses must be discarded (outdated). Without the supplier explicitly informing the retailer of the product age, the age remains unknown until receipt. With information sharing, the retailer is informed of the product age prior to placing an order and hence can utilize this information in its decision–making. We formulate the retailer’s replenishment policies, with and without knowing the age of the product upon receipt, and measure the VOI as the marginal improvement in profit that the retailer achieves with information sharing, relative to the case when no information is shared. We establish the importance of information sharing and identify the conditions under which substantial benefits can be realized.
The Effect of Competition on Recovery Strategies (ed.3)

(Georgia Institute of Technology, 2005-11) Ferguson, Mark E. ; Toktay, L. Beril

Manufacturers often face a choice of whether to recover the value in their end-of-life products through remanufacturing. In many cases, firms choose not to remanufacture, as they are (rightly) concerned that the remanufactured product will cannibalize sales of the higher-margin new product. However, such a strategy may backfire for manufacturers operating in industries where their end-of-life products (cell phones, tires, computers, automotive parts, etc) are attractive to third-party remanufacturers, who may seriously cannibalize sales of the original manufacturer. In this paper, we develop models to support a manufacturer’s recovery strategy in the face of a competitive threat on the remanufactured product market. We first analyze the competition between new and remanufactured products produced by a monopolist manufacturer and identify conditions under which the firm would choose not to remanufacture its products. We then characterize the potential profit loss due to external remanufacturing competition and analyze two entry-deterrent strategies: remanufacturing and preemptive collection. We find that a firm may choose to remanufacture or preemptively collect its used products to deter entry, even when the firm would not have chosen to do so under a pure monopoly environment. Finally, we discuss conditions under which each strategy is more beneficial.
Sharing Information to Manage Perishables (ed.2)

(Georgia Institute of Technology, 2005-08) Ferguson, Mark E. ; Ketzenberg, Michael E.

We address the value of information (VOI) sharing in the context of a two echelon, serial supply chain with one retailer and one supplier that provides a single perishable product to consumers. We evaluate information sharing under two supply chain structures where the retailer shares it inventory level and replenishment policy with the supplier. In the first structure, referred to as Decentralized Information Sharing, both facilities make their own profit-maximizing replenishment decisions. In the second structure, referred to as Centralized Control, the replenishment decisions are coordinated. The latter supply chain structure corresponds to the industry practices of company owned stores or vendor managed inventory. We measure the VOI as the marginal improvement in expected profits that a supply chain achieves relative to the case when no information is shared. Key assumptions of our model include stochastic demand, lost sales, and fixed order quantities. We establish the importance of information sharing in the supply chain and identify conditions under which relatively substantial benefits are realized. As opposed to previous work on the VOI, the major benefit of information sharing in our setting is driven by the suppliers ability to provide the retailer with fresher product. By isolating the benefit by firm, we show that sharing information is not always Pareto improving for both supply chain partners in the decentralized setting.
Marketing Strategy Formulation in the Commercialization of New Technologies

(Georgia Institute of Technology, 2005-07-20) Vincent, Leslie Harris

The key objective of Part I is to synthesize 23 years of innovation research findings from economic, strategy, and marketing literatures and extend the current theoretical knowledge base in these domains through meta-analysis. In general, empirical evidence of the nature of the relationship between innovation and its antecedents and consequences is provided, while at the same time providing answers to conflicting conclusions within this field. The conclusions reached provide a more comprehensive understanding of the drivers of innovation as well as the implications associated with the phenomena. In addition, this study seeks to aid in building a strong theoretical foundation relating to the nature of the relationship of innovation with key antecedents and outcomes. It is demonstrated that innovation serves as a partial mediator of the relationships between organizational and environmental antecedents and firm performance. Part II builds upon the innovation foundations set forth in Part I and extends the focus to consider how innovations are commercialized outside traditional organizational boundaries. Drawing upon the Resource-based view of the firm, the impact of two dynamic capabilities (network ties and absorptive capacity) on marketing strategy formulation effectiveness is explored. Utilizing a unique sample of university pre-startup teams, this research is able to track these teams over time (longitudinal research design) and provide an empirical examination of the role of dynamic capabilities in the effective formulation of marketing strategies. There has been very little empirical research on the formation of strategies at the team level and furthermore, even less research examining marketing strategy making for technologies that were developed outside traditional organizational boundaries and without a predefined market application. Overall, this research will not only contribute significantly to the current innovation and marketing strategy literature, but will also open up new avenues of research in marketing entrepreneurship.
The Effect of Competition on Recovery Strategies (ed.2)

(Georgia Institute of Technology, 2005-07) Ferguson, Mark E. ; Toktay, L. Beril

Manufacturers often face a choice of whether to recover the value in their end-of-life products through remanufacturing. In many cases, firms choose not to remanufacture, as they are (rightly) concerned that the remanufactured product will cannibalize sales of the higher-margin new product. However, such a strategy may backfire for manufacturers operating in industries where their end-of-life products (cell phones, tires, computers, automotive parts, etc) are attractive to third-party remanufacturers, who may seriously cannibalize sales of the original manufacturer. In this paper, we develop models to support a manufacturer's recovery strategy in the face of a competitive threat on the remanufactured product market. We first analyze the competition between new and remanufactured products produced by a monopolist manufacturer and identify conditions under which the firm would choose not to remanufacture its products. We then characterize the potential profit loss due to external remanufacturing competition and analyze two entry-deterrent strategies: remanufacturing and preemptive collection. We find that a firm may choose to remanufacture or preemptively collect its used products to deter entry, even when the firm would not have chosen to do so under a pure monopoly environment. Finally, we discuss conditions under which each strategy is more beneficial.