A Study On Multi-period Problems In Revenue Management And Supply Chain Management

In retail, as a result of shorter life cycle of products and increasing uncertainty on demands, more and more companies are forced to deal with business issues such as stock-out and mark-down. In addition, the developments of information technology, and the characteristics of cost structure in retail provide a key support on data for the quantitative analysis of decision-making and management in this industry. Thus, the research on revenue management and supply chain management in retail practice is more and more concerned by people. However, as the company's objective of optimizing earnings will be progressively transformed from short-term to long-term, and decisions-making in management practice are usually based on discrete time, so the promotion on existing reserch on revenue management and supply chain management will be imperative along the dimension of time(from continuous time or single period to multi-period). Therefore, based on the retail background, for the shortcomings in existing literature, along time (Period) and space (Stage) dimensions, in this thesis we attempt to make quantitative analysis of some multi-period problems in revenue management and supply chain management.1) Multi-Period Problems in Revenue Management.In this part, we focus on the issues on pricing and inventory control in revenue management from the perspective of the dealers (retailers), according to different characteristics of the products, in particular the attributes of demands.First, we consider the problem of choosing optimal batch selling quantities for a class of seasonal items with fixed capacity under random price-sensitive demand. Where, the policies of capacity allocation over two-period are discussed for this kind of seasonal products, and impacts of the market parameters on the optimal decision-making and the optimal revenue value are studied through numerical analysis. In view of theoretical and numerical results, we find that the optimal batch quantities set to sell are non-decreasing in current price and inventory on hand, and are non-increasing in the number of sales periods remaining under random price-sensitive demand.Second, in retail practice, large piles of some items are displayed in supermarkets for sale, and some items with limited-quantities are put for sale. According to this phenomenon, we are the first time to introduce the stock-dependent demand into the research area of revenue management. On this basis, we address the combined periodical pricing and capacity allocation problem when the demands in any period depend randomly, in a general form, on the price and starting inventory level on display. We formulate a MDP model for the problem, find an analytic solution for the single–period model while the demand function is increasing in starting inventory level on display and is dependent of price in a power form. Suppose that the inventory to be set aside for the future in each period is determined at the beginning of the horizon, we identify that the optimal policy for periodical pricing problem is myopic and unique. Finally, we develop structural properties. The main results are as follows:(a)While the inventory level displayed has a negative influence on demand, for some valuable goods, the clearance sales policy is not necessarily considered at the end of sales horizon. Since too many inventories on display may not benefit to pricing and mark-down may do harm to the development of brand, the policy with high-level price and low–quantity sales is generally adopted by the sellers who sell those valuable goods. (b)The unique optimal price of multi-period pricing problem exists for a given capacity allocation schedule. (c)The recourse in pricing usually results in better sales performance, and is more advisable for those goods with low-level price elasticity, high-level risk and limited-amount supply.Finally, we are the first time to define and describe this type of products with fixed capacity in sales horizon and non-perishable properties, and discuss the problems such as their initial inventory control, the amount preset to sell for current period and the choice of selling time. More specifically, we suppose that the demand in each period is an independent random variable with known distribution function, and the price is determined exogenously and fluctuates according to AR process. We develop finite and infinite horizon models with the objective of maximizing total expected discounted revenue, discuss existence of the optimal sales policy and characterize structural properties of its, establish a practical and efficient algorithm for computing the optimal batch quantities and the optimal revenue. Finally, we examine the analytic results and characterize how system parameters affect the optimal policy and corresponding optimal revenue value through a series of numerical experiments. In addition, we offer some managerial insights as to how long the sales horizon should be chose to last for managers. The main results are as follows: (a)Under the higher demand uncertainty, those sellers who allocate rationally the inventory held on hand at each period are able to snatch more profits. However, the increment of revenue resulted from prolonging the sales horizon is not obvious under moderate demand variation, to take the quick–break sales policy is advisable allowing for the opportunity costs of inventory capital. (b)The lower the holding costs and the greater the trends of mark-up, the more the optimal quantities preserved for future periods and the initial stock; in addition, the quantities preset for the current period are non-increasing in the current price. (c)Different from the traditional problem of capacity allocation in revenue management, from a non-perishable perspective, the seller may arbitrarily choose the number of sales period. The greater the demand variation and the higher the price and the larger range of price rising and the lower the holding costs are, the longer the sales horizon should be considered to last.2) Multi-Period Problems in Supply Chain Management.In this part, we investigate decisions-making (ordering, pricing, capacity allocation) for channel members and their impacts on supply chain performance under the framework of supply chain based on information-sharing and contractual mechanism. First, we study two main mechanisms which coordinate supply chain system, i.e, information-sharing and supply chain contract. In the beginning, the theories of information-sharing mechanism under two different demands (independent demand and correlated demand)are outlined; next, the theories of supply chain contract are illustrated based on two different research methods (optimization, game theory) ; on this basis, the progress of integrated research on these two coordination mechanisms are then disserted. The main results are as follows: Since both information-sharing and contracts are effective mechanisms to coordinate supply chain system, in practice, to optimize or to integrate these two mechanisms will undoubtedly enhance the potential benefits of channel members. In a sense, the type of contract established among the members basically defines the relationships each other. Whether to share information, with whom to share, to what extent to share, such issues are dependent on close degree of these relationships. Therefore, the issue of information-sharing among the members should also be included in the scope of establishment of contract, rather than be treated separately.Second, relying on the wholesale price contract, we consider influences of some strategies of downstream retailer's revenue management on the performances of upstream suppliers and whole supply chain system. Specifically, suppose that the sales horizon consists of two perods, we discuss the impacts of retailer's optimizing allocation for the fixed capacity over two periods on order, wholesale price and performances of decenteralized supply chain. We begin with establishing a mathematical model of the problem, and then make theoretical and numerical analysis of the model, and through comparing with the traditional wholesale price contract we find that: (a)For centeralized system, optimizing selling strategies contibute to reduce the output of the system, at the same time, increase the profits of the system; and for decenteralized supply chain system, retailer's optimizing selling strategies enhance not only his own share of the profits of the channels, but also the efficiencies and performances of system comparing with the traditional wholesale price contract. (b)Whether the traditional wholesale price contract or the wholesale price contract based on the sales optimization, there exist their own suitable business environments. For high-end products with larger margin of prices rising, the wholesale price contract based on the sales optimization is superior to the traditional wholesale price contract; and for daily necessities with more stable prices, in such low-end products market, the traditional wholesale price contract is more suitable for being applied.In conclusion, in addition to fashion, perishable products with short life cycle, this study also set foot the other rare and high-end non-perishable products. Stem from the characteristics of the latter and combine with the retail practice, in specific study of this thesis, we propose a few of problems not involved in previous literature, and obtain some meaningful results and management insights through modeling analysis and numerical experiments.