Essays on product assortment, inventory and pricing decisions in supply chains

This dissertation is a collection of three essays on retail inventory management under discrete consumer choice. We apply analytical models that incorporate joint product assortment, inventory, and pricing decisions in a two-stage supply chain to examine how structural issues (like inventory ownership, nature of fulfillment and decision-making power) and interactions between entities (in terms of pricing decisions and contractual agreements) affect the optimal level of product assortment that is offered to customers.; In the first essay, we compare product assortment and stocking decisions in seven supply chain structures, and delineate the critical influence of the structure of a supply chain on the size of the optimal assortment. The supply chain structures are differentiated by the customer fulfillment mechanisms employed and the allocation of the rights regarding assortment decisions between the entities. Fulfillment can occur from a single or dual stage/s in the supply chain and can be physical and/or virtual. We demonstrate that in most practical situations, single or dual stage fulfillment supply chains that employ a virtual fulfillment mechanism will offer a larger product assortment than supply chains that do not do so.; The second essay studies a price-only contract between an upstream wholesaler and a downstream retailer in a segment of the supply chain, where the wholesaler makes the pricing decision and the retailer makes the quantity and product assortment decisions. We provide a detailed characterization of the profit functions of the two entities. We show that the double marginalization and the consequent lack of coordination in the supply chain manifests as lower product variety that the retailer offers to his customers. Finally, we study simple formulations of five coordinating contracts and discuss the relative cost of administering these contracts in a multi-product setup.; We conclude in the third essay by applying non-analytical approaches to examine the effect of some key factors on assortment planning. These include the customer preference structure, retail price dependent utility function, correlation of retailer demands and stock-out based substitution. The exposition and insights in this essay supplement and enrich our analytical approach in the first two essays.