Publication Type
Working Paper
Version
publishedVersion
Publication Date
2-2004
Abstract
In the stochastic multiperiod inventory problem, a vast majority of the literature deals with demand volume uncertainty. Other dimensions of uncertainty have generally been overlooked. In this paper, we develop a newsboy formulation for the aggregate multiperiod inventory problem intended for products of short sales season and without replenishments. A distinguishing characteristic of our formulation is that it takes a time dimension of demand uncertainty into account. The proposed model is particularly suitable for applications in haute couture, i.e., high fashion industry. The model determines the time of switching primary sales effort from one season to the next as well as optimal order quantity for each season with the objective of maximizing expected profit over the planning horizon. We also derive the optimality conditions for the time of switching primary sales effort and order quantity. Furthermore, we show that if time uncertainty and volume uncertainty are independent, order quantity becomes the main decision over the interval of the primary selling season. Finally, we demonstrate that the results from the two-season case can be directly extended to the multi-season case and the limited resource multiple-item case.
Discipline
Business Administration, Management, and Operations
Research Areas
Operations Management
Citation
Park, Byung Joon; Chang, Yih-Long; and Ho, Johnny C..
Inventory Model with Seasonal Demand: A Specific Application to Haute Couture. (2004).
Available at: https://ink.library.smu.edu.sg/lkcsb_research/1921
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.