We consider a decentralized, two-echelon supply chain where the upper echelon --the supplier-- bears the inventory risk. To service the retailers, the supplier either keeps inventory reserved for each of her customers or else pools inventory to share among her customers. The common insight regarding inventory pooling is that it reduces costs and so increases profits for the supply chain party carrying inventory. However, it has recently been shown that inventory pooling may indeed reduce the total supply chain profits. We further show that inventory pooling may reduce supply chain profits even under traditional service contracts based on the frequently invoked measure of service, probability of stock-out. We model the inventory transactions among the retailers and the supplier as a cooperative game. The players have the option of reserving inventory or forming inventory-pooling coalitions. The total profit of the coalitions is allotted to the players using a profit-sharing mechanism based on Shapley value. We analyze the properties of the proposed profit-sharing scheme in two steps. We first consider a stylized model with two retailers who are not necessarily identical. Then we extend the analysis to an arbitrary number of identical retailers. In both cases, we assume the demand across retailers is independent. We find that the Shapley value allocations coordinate the supply chain and are individually rational. However for more than two retailers, they may not be in the core. Even when they satisfy all the stability properties, including membership in the core, they may be perceived unfair since a player's allocation can exceed his contribution to the total supply chain profit. In addition to analyzing the stability properties of the proposed allocation mechanism, we are also interested in the types of behavior the mechanism induces in the players. We find that the retailers prefer pooling partners with either very high or low service level requirements and the supplier prefers retailers with low service requirements since this gives her the ability to maximize her profit allocation. Finally, we analyze the effects of demand variance on the allocations and the profitability of strategic retailer coalitions.

This thesis studies the allocation of stock in a two-level inventory system with stochastic demand. The system consists of one central warehouse which supplies N non-identical retailers with one single product. Customer demand occurs solely at the retailers and follows independent Poisson processes. The purpose is to investigate the value of using a more advanced allocation policy than First Come-First Serve at the central warehouse. The focus is on evaluating how well the simple First Come-First Serve assumption works in a system where the warehouse has access to real-time point-of-sale data, and where shipments are time based and consolidated for all retailers. The considered allocation policy is a myopic policy where the solution to a minimization problem, formulated as a constrained newsvendor problem, determines how the warehouse allocates its stock to the retailers. The minimization problem is solved using (a heuristic method based on) Lagrangian relaxation, and simulation is used to evaluate the average inventory holding costs and backorder costs per time unit when using the considered policy. The simulation study shows that cost savings around 1-4 percent can be expected for most system configurations. However, there were cases where savings were as high as 5 percent, as well as cases where the policy performed worse than First Come-First Serve. The study also shows that the highest cost savings are found in systems with relatively low demand, few retailers, short transportation times and a short time interval between shipments.

<p>This thesis studies the allocation of stock in a two-level inventory system with stochastic demand. The system consists of one central warehouse which supplies N non-identical retailers with one single product. Customer demand occurs solely at the retailers and follows independent Poisson processes. The purpose is to investigate the value of using a more advanced allocation policy than First Come-First Serve at the central warehouse. The focus is on evaluating how well the simple First Come-First Serve assumption works in a system where the warehouse has access to real-time point-of-sale data, and where shipments are time based and consolidated for all retailers. The considered allocation policy is a myopic policy where the solution to a minimization problem, formulated as a constrained newsvendor problem, determines how the warehouse allocates its stock to the retailers. The minimization problem is solved using (a heuristic method based on) Lagrangian relaxation, and simulation is used to evaluate the average inventory holding costs and backorder costs per time unit when using the considered policy. The simulation study shows that cost savings around 1-4 percent can be expected for most system configurations. However, there were cases where savings were as high as 5 percent, as well as cases where the policy performed worse than First Come-First Serve. The study also shows that the highest cost savings are found in systems with relatively low demand, few retailers, short transportation times and a short time interval between shipments.</p>

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This dissertation studies strategies to mitigate the risks associated with operational and strategic decisions of a firm, particularly focusing on project management, product development and procurement decisions. In the first essay we develop two simulation-based methods to evaluate risky capital investment projects that involve managerial flexibility. Many risky projects are characterized by significant demand and operational risks (such as learning curve uncertainty) that are difficult to capture by simple stochastic processes. We propose using system dynamics simulations to estimate the cash flow resulting from these projects and build upon prior work on real options valuation in the decision analysis literature to develop two valuation algorithms. In the second essay we explore the technology investment decisions for platforms in markets that exhibit cross-network effects. We focus on the trade-off firms must make between investing new product development resources to increase a platform's core performance and functionality versus investments designed to leverage the platform's cross-network effects. Abstracting from examples drawn from multiple industries, we use a strategic model to gain intuition about how to make such trade-off decisions under competition. In the third essay, we analyze the optimal procurement strategy of a firm that faces supply and demand risk. In particular, the firm can source from two unreliable suppliers with different delivery characteristics. We study the optimal order allocation policy shaped by the trade-offs between delivery leadtime, reliability and procurement cost. Further, we discuss the value of leadtime flexibility in supply risk mitigation and highlight the role of an inferior supplier in a firm's multi-sourcing strategy. The main contribution of this dissertation to the operations management literature is two-fold. First, it illustrates the role of effective risk mitigation through operational strategies of leadtime flexibility and supply diversification as well as through recognizing managerial flexibility. Second, it highlights the importance of leveraging third-party content development while making technology investment decisions for platforms in two-sided markets. / text

The thesis is focused on finding optimal solution of stock company Dencop Lighting spol. s.r.o. At the very beginning of the thesis there is a brief characteristic of Dencop Lighting, their market aims and goals. After this view we are going to introduce you warehouse systems. There are analysis of products, their selection, flows and potentials for company. After completing product analysis we are going to focus on key factors of optimalization. There are mentioned many ways of optimalization with their advantages and disadvantages. Deterministic and stochastic methods are included as well. For better illusion in real live you can find added CD at the bottom of the thesis. Using guide of this software with detailed information about functions is in last pages of the thesis.