Inventory Pricing Research Articles

Joint inventory-and-pricing strategy for a stochastic continuous-review system

We analyze an infinite-horizon continuous-review stochastic inventory system in which the selling price and inventory replenishment are determined simultaneously. The demand process is Poisson with a price-dependent arrival rate. The ordering cost includes a fixed setup cost and a variable cost proportional to the order quantity. We obtain closed-form solutions for the optimal inventory control strategy and optimal pricing strategy, which provide managerial insights as well as quantitative and qualitative relationships between decision rules and system parameters. We show that the optimal price is a unimodal function of the inventory level. We also develop efficient algorithms to compute the optimal strategies and present numerical examples.

Prysverlagings op voorraad met ’n dalende vraag

Opsomming Hierdie artikel stel 'n heuristiese benadering voor om die verliese op voorraad met 'n dalende vraag en onbekende tydshorison te minimeer. Die twee metodes wat voorgestel word, gebruik 'n benaderde vraagkromme om die verwagte verliese te voorspel. Albei heuristieke gebruik hierdie vooruitskatting om te bepaal wanneer die prys van items in voorraad afgemerk moet word ten einde verkope te versnel om verliese te vermy wat as gevolg van lang omsettye ontstaan. 'n Gevallestudie wat die werklike data van 'n CD-winkel simuleer, word gebruik om die twee heuristieke se prestasie relatief tot die huidige afmerkstrategie van die bestuur te meet. Abstract The problem faced in this paper is a periodic pricing of inventory with obsolescence and an unknown time horizon. Typical inventory items with these properties are music CDs. The periodic pricing of music CDs is used as a tool to manipulate the demand thereof as they become less popular. A CD will, however, not perish in the time it is kept as inventory, as is the case with perishable inventory. This property accounts for the obsolescence. Other kinds of items in inventory that also become obsolete are typical fashion goods, like clothes. Contrary to CDs the demand for these goods do have a known time horizon (usually at the end of a season). The paper starts out by giving an introduction to the problems faced in a CD shop. Back- ground information is given on how CD shops operate. The method of pricing CDs is ex- plained. The current policy at a CD shop of when, and how many orders are placed is explained. This introduction is followed by an overview of relevant literature on various types of inventory problems. The review is structured according to the three properties of the problem. The first property is the pricing of items in inventory. The second property is that items in inventory may be considered as inventory with a random lifetime. The third property is that the items in inventory become obsolete. The subject of the pricing of inventory has received substantial attention in the operations research literature over the years. The conclusion after consultation of the references on the periodic pricing of inventory is that all these articles have two characteristics in common: the time horizon of the items in inventory are considered to be fixed and it is known by how much the price will change. In the problem under consideration only the second characteristic may be assumed. The objective in most of the literature is to find the time when, and how many times the price should be changed.

Harvest, inventory, and stumpage prices: Consumption outpaces harvest, prices rise slowly

America's appetite for timber will continue to grow, and consumption will exceed domestic harvest over the next 50 years. Imports will supply the bulk of softwood consumption growth in the next 15 years. After 2015, both domestic softwood harvest and imports will expand. Private softwood inventories will rise in all regions and will be higher by 2050 than current levels. Softwood sawtimber stumpage prices will trend upward in all regions, while pulpwood prices will rise only in the final two decades of the projection. Southern hardwood inventories will fall after 2010 with rising stumpage prices. Northern hardwood harvest and inventories will grow, yielding stable pulpwood prices but modestly rising sawtimber prices.

Filtering and predicting the cost of hidden perished items in an inventory model

This paper is concerned with a discrete time, discrete state inventory model for items of changing quality. Items are assumed to be in one of a finite number, M, of quality classes that are ordered in such a way that Class 1 contains the best quality and the last class contains the pre‐perishable quality. The changes of items′ quality are dependent on the state of the ambient environment. Furthermore, at each epoch time, items of different classes may be sold or moved to a lower quality class or stay in the same class. These items are priced according to their quality, and costs are incurred as items lose quality. Based on observing the history of the inventory level and prices, we propose recursive estimators as well as predictors for the joint distribution of the accumulated losses and the state of the environment.

The Learning Styles of High-Achieving and Creative Adolescents in Hungary

The learning-style preferences, levels of academic achievement, and extracurricular creative activities among students from one junior high school and four high schools in Hungary were investigated and compared. The Learning Style Inventory (Dunn, Dunn, & Price, 1996) and the Tel Aviv Activities Inventory (Milgram, 1987) were used to identify leaming-style preferences and areas of creative performance prevalent among these students. High, average, and low academic achievers and students creative in various domains demonstrated significantly distinct leaming-style characteristics.

A Comparative Evaluation of Belief Revision Models in Auditing

External auditors typically gather audit evidence in a sequential fashion and revise their estimates of likelihood of material misstatements based on the evidence collected. Optimal utilization of audit evidence can help control audit risk and improve audit efficiency and effectiveness. This paper first shows how a typical audit risk assessment and belief revision task can be modeled using four theoretical models of belief revision. Then the descriptive properties of these models are evaluated based on the actual judgments of experienced auditors who assessed the likelihood of error in a task involving inventory valuation. A realistic audit case was administered to 101 experienced auditors. Models based on the following theories were evaluated: a version of Bayesian inference labeled Cascaded Inference Theory (Schum 1987; Schum and DuCharme 1971), two versions of the Belief Adjustment Model (Hogarth and Einhorn 1992), and a version of the Dempster-Shafer Theory of Belief Functions (Srivastava and Shafer 1992; Shafer 1976). The experimental task involves belief revision after combining evidence about the reliability of a client's internal control system with substantive evidence relating to inventory pricing. Both the experimental and manipulation check results show that the auditors were sensitive to differences in the source reliability and diagnosticity of the manipulated audit evidence. The analytical results reveal that the four models differ in the way they interpret evidence relating to internal control system reliability and the manner in which such evidence is aggregated with price test evidence. Yet, all four models correctly predict the direction of auditor belief revision. The study reveals that important structural differences in the models result in differences in the magnitude, but not the direction of belief revision. This theoretical and empirical evidence has heretofore been unavailable in the literature. Further, the version of the Hogarth and Einhorn (1992) Belief Adjustment Model that views control systems reliability as negative evidence is the only model that captures both the direction and magnitude of auditors' belief revision. Finally, auditors' belief revision was lower than that predicted by the remaining three models, with the extent of discounting ranging from 31 percent to 40 percent. Under-utilization of evidential value with respect to any of the models implies opportunities to improve audit performance either through training or with decision aids. The paper discusses implications for both audit theory and practice.

A Comparative Evaluation of Belief Revision Models in Auditing

External auditors typically gather audit evidence in a sequential fashion and revise their estimates of likelihood of material misstatements based on the evidence collected. Optimal utilization of audit evidence can help control audit risk and improve audit efficiency and effectiveness. This paper first shows how a typical audit risk assessment and belief revision task can be modeled using four theoretical models of belief revision. Then the descriptive properties of these models are evaluated based on the actual judgments of experienced auditors who assessed the likelihood of error in a task involving inventory valuation. A realistic audit case was administered to one hundred and one experienced auditors. Models based on the following theories were evaluated: a version of Bayesian inference labeled Cascaded Inference Theory (Schum 1987; Schum & DuCharme 1971), two versions of the Belief Adjustment Model (Hogarth & Einhorn 1992), and a version of the Dempster-Shafer Theory of Belief Functions (Srivastava and Shafer 1992; Shafer 1976). The experimental task involves belief revision after combining evidence about the reliability of a client's internal control system with substantive evidence relating to inventory pricing. Both the experimental and manipulation check results show that the auditors were sensitive to differences in the source reliability and diagnosticity of the manipulated audit evidence. The analytical results reveal that the four models differ in the way they interpret evidence relating to internal control system reliability and the manner in which such evidence is aggregated with price test evidence. Yet, all four models correctly predict the direction of auditor belief revision. The study reveals that important structural differences in the models result in differences in the magnitude, but not the direction of belief revision. This theoretical and empirical evidence has heretofore been unavailable in the literature. Further, the version of the Hogarth and Einhorn Belief Adjustment Model that views control systems reliability as negative evidence is the only model that captures both the direction and magnitude of auditors' belief revision. Finally, auditors' belief revision was lower than that predicted by the remaining three models, with the extent of discounting ranging from 31% to 40%. Under-utilization of evidential value with respect to any of the models implies opportunities to improve audit performance either through training or with decision aids. The paper discusses implications for both audit theory and practice.

Can we generalize about the learning style characteristics of high academic achievers?

In 1980 Dunn and Price used their Learning Style Inventory (Dunn, Dunn & Price, 1975) to investigate differences between the learning style preferences of high academic achieving students and the preferences expressed by same‐age students with average or below average academic achievement. The purpose of the study described in this article was to determine if and how the learning style preferences of a different group of high academic achieving students, inventoried at a later date, but with the same instrument, differed from those identified in the original study. A discriminant function analysis analyzed the learning styles data obtained from 500 students in grades 4 ‐ 8. While significant differences (p < .001) in the preferences distinguished between the average and above average achieving students groups, there was minimal overlap with the preferences identified in original investigation. The authors conclude that the differences within an achievement group may be as great as between groups, and that it is improper to prescribe instructional methods or categorize groups of learners by presuming that they have similar style preferences.

Price smoothing and inventory adjustments

The empirical results in this paper show a negative and statistically significant relationship between inventory variability and price variability, thereby lending support to the contention that inventory adjustments help to smooth price. The implication is that inventories assist in coordination of oligopolistic agreements.

Product costing continuum for managerial decisions

Develops a continuum of product costing systems (PCSs) and demonstrates its application to making managerial decisions. Explains the relevance of this structure to managerial issues including inventory control, pricing, special decisions and product design. Synthesizes various PCSs into a coherent structure and introduces new PCSs such as direct costing and super direct costing (which are different from the classic variable costing and super variable costing) systems. Explains how the continuous nature of issues facing management needs a matching continuum of an endless number of PCSs.

Incremental Implementation of Learning Style Strategies Among Urban Low Achievers

Structural analysis units on compound words, plurals, prefixes, suffixes, and contractions were divided into five 2-week phases, during which varied learning style (LS) strategies were introduced incrementally to 81 special education and 35 low-achieving general education students. During the first phase no LS accommodations were made. During the last phase all LS accommodations were removed. Pre- and posttests were administered in each of the five phases to determine reading achievement. The Learning Style Inventory (Dunn, Dunn, & Price, 1994) was administered to assess each student's LS preference. Significant gains in reading achievement were revealed for both special education and general education students with LS preferences when they were taught incrementally using learning-style strategies. For students with no LS preferences, reading achievement varied greatly across the course of the experiment. A decrement in achievement for the students with LS preferences occurred when the LS strategies were removed. The Semantic Differential Scale (Pizzo, 1981) was administered 4 times during the experiment; for both special education and regular education low achievers, attitudes toward reading became increasingly favorable as LS instruction was added regardless of their LS preferences.

Do Japanese Automakers Maximize Profits? A Systems Analysis of the Pricing of Automobile Inventories

This article investigates Japanese automaker pricing practices on the U.S. market and finds them compatible with short run profit maximization. The short run is here the selling time of a typical inventory holding and short run profit is defined as average per unit of time profit made over this selling time. Maximizing this concept of short run profit implies setting markup over the average cost of goods equal to the inverse of the price sensitivity of inventory selling time. To test for short run profit maximizing behavior, estimates of this price sensitivity for each firm are compared to the actual markups applied by U.S. and Japanese automakers.

Optimal Dynamic Pricing of Inventories with Stochastic Demand over Finite Horizons

In many industries, managers face the problem of selling a given stock of items by a deadline. We investigate the problem of dynamically pricing such inventories when demand is price sensitive and ...

Optimal Dynamic Pricing of Inventories with Stochastic Demand over Finite Horizons

In many industries, managers face the problem of selling a given stock of items by a deadline. We investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm's objective is to maximize expected revenues. Examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry, which markets space such as seats on airline flights, cabins on vacation cruises, and rooms in hotels that become worthless if not sold by a specific time. We formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity (resp., price) as a function of the stock level and the length of the horizon. For a particular exponential family of demand functions, we find the optimal pricing policy in closed form. For general demand functions, we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple, fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity. Finally, we extend our results to the case where demand is compound Poisson; only a finite number of prices is allowed; the demand rate is time varying; holding costs are incurred and cash flows are discounted; the initial stock is a decision variable; and reordering, overbooking, and random cancellations are allowed.

Influence of production costs and inventories on mineral prices

The purpose of this article is to broaden understanding of the factors which exert major influences on prices for industrial metals beyond the widely recognized tendency for prices and inventories to move in opposite directions. Specifically, the relationship between inventory levels and price volatility is examined. In addition, the relationship between prices and production costs is also examined. A few thoughts are expressed on the relationship between prices and industry structure. The paper includes a qualitative discussion about why a link should exist between prices and production costs, a graph illustrating the relationship between prices and inventories, and econometric equations quantifying the relationship between prices, production costs and inventories.

STRATEGIES FOR TEACHING WORD RECOGNITION TO DISABLED READERS

The Dunn and Dunn Learning Styles Model is described, along with selected instructional strategies for teaching word recognition to students who cannot master vocabulary and selected language arts skills through conventional methods. Such youngsters often are global processors with only tactual and kines‐thetic perceptual strengths, according to the Learning Style Inventory (Dunn, Dunn, & Price). Research conducted at more than 70 institutions of higher education and in schools throughout the United States has revealed the impact of teaching such students through their learning styles strengths — global/tactual/ kinesthetic. Those data are reported herein.

Criteria of inventory pricing

There is no general rule to inventory pricing - the basic principle is that inventory value must express the utility of inventory on hand considered as a part of the circulating capital which is likely to realize revenues. Inventory valuation methods based on this principle are discussed in the paper. The notions of net break up value and current replacement cost are introduced and their relation is shown. The basic cost determination methods (LIFO and FIFO) and their effects are also discussed.

Futures trading and oil market conditions

This paper examines how changes in oil market conditions affect the link between spot and futures prices for oil and ways in which information about market conditions may be extracted from observation of futures trading. It is found that futures prices do not perform well as simplistic predictors of spot prices. A more sophisticated model of spot and futures prices is developed that emphasizes (1) the relationship between inventory demand and price behavior, and (2) the effect of supply shocks and inventory demand shocks on market performance. Comparison of the model's results with actual behavior in the market for No. 2 Heating Oil indicates that futures market activity can be useful as a guide for understanding how a disturbance is affecting the market. 12 refs., 6 figs., 4 tabs.

Pricing strategies for a non-replenishable item under variable demand and inflation

In this paper a model is developed for the pricing of non-replenishable inventory. Pricing strategies are examined that determine the minimum special price for immediate disposal of the entire stock. These are assessed using the return from inventory, net of holding costs, available for financing overheads and profits. Previous studies [2] and [3] have presented models for pricing the immediate disposal case. These have assessed the strategy on the basis of the lump sum generated at the end of a certain period. Their results gave, in many instances, very low special prices. This paper's result do not support their contentions in most instances. Indeed for many practical situations a special price of at least 80% of normal price is required. Substantially lower special prices are only justified when declining demand causes units of inventory to be sold at scrap value.

The Sino-Soviet Territorial Dispute, 1949-1964

Accounting Changes. Accounting Policies. Business Combinations. Cash Flow Statement. Changing Prices. Consolidated Financial Statement. Contingencies. Convertible Debt and Debt with Warrants. Current Assets and Current Liabilities. Deferred Compensation Contracts. Depreciable Assets and Depreciation. Development Stage Enterprises. Earnings Per Share. Equity Method. Extinguishment of Debt. Financial Instruments. Foreign Operations and Exchange. Futures Contracts. Government Contracts. Impairment of Loans and Long-Lived Assets. Income Taxes. Instalment Sales Method of Accounting. Intangible Assets. Interest Costs Capitalized. Interest on Receivable and Payables. Interim Financial Reporting. Inventory Pricing and Methods. Investment Tax Credit. Investments in Debt and Equity Securities. Leases. Long Term Construction Contracts. Long Term Obligations. Nonmonetary Transactions. Pension Plan Financial Statements. Pension Plans-Settlements and Curtailments. Postemployment and Postretirement Benefits Other Than Pensions. Product Financing Arrangements. Property Taxes. Quasi-Reorganization. Related Party Disclosures. Research and Development Costs. Results of Operation. Revenue Recognition. Segment Reporting. Stockholder's Equity. Stock Issued to Employees. Transfer of Receivables with Recourse. Troubled Debt Restructuring. Banking and Thrift Institutions. Entertainment Industry. Broadcasters. Entertainment Industry. Cable TV. Entertainment Industry. Motion Picture Films. Entertainment Industry. Records and Music. Franchise Fee Revenue. Insurance Industry. Insurance Enterprises. Insurance Industry. Title Plant. Mortgage Banking Industry. Not-For-Profit Organization. Oil and Gas Producing Companies. Real Estate Transactions. Real Estate Costs and Initial Rental Operations. Real Estate. Recognition of Sales. Regulated Industries. Disclosure Index. Self Study CPE Program. Topical Index.