Operations, Information and Decisions Papers
Document Type
Journal Article
Date of this Version
3-2003
Publication Source
Operations Research
Volume
51
Issue
2
Start Page
329
Last Page
335
DOI
10.1287/opre.51.2.329.12788
Abstract
A standard problem in operations literature is optimal stocking of substitutable products. We consider a consumer-driven substitution problem with an arbitrary number of products under both centralized inventory management and competition. Substitution is modeled by letting the unsatisfied demand for a product flow to other products in deterministic proportions. We obtain analytically tractable solutions that facilitate comparisons between centralized and competitive inventory management under substitution. For the centralized problem we show that, when demand is multivariate normal, the total profit is decreasing in demand correlation.
Keywords
Inventory/production, stochastic, multiproduct: substitution, Games/group decisions, noncooperative: Nash equilibrium
Recommended Citation
Netessine, S., & Rudi, N. (2003). Centralized and Competitive Inventory Models With Demand Substitution. Operations Research, 51 (2), 329-335. http://dx.doi.org/10.1287/opre.51.2.329.12788
Included in
Business Administration, Management, and Operations Commons, Organization Development Commons
Date Posted: 27 November 2017
This document has been peer reviewed.