Inventory model with seasonal demand: a specific application to haute couture

Abstract

In the existing body of the newsvendor literature, the duration and intervals of sales periods are given to the problem. We have learned from the haute couture industry; however, the start and finish time of seasons are an integral part of managerial discretion. The switching time decision, when to terminate the current season and to start a new season, is particularly important to haute couture because the transition from one season to next occurs virtually overnight in the high fashion industry. In this paper, we present a variation of the newsvendor model that simultaneously determines the order quantity and the intervals of sales season. The proposed model investigates the switching time and quantity decisions simultaneously. We derive the optimality conditions for the switching time and order quantity. We also illustrate the search for the optimal solutions with numerical examples. Finally, we discuss several future research topics and model extensions.