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Inventory management with simultaneously horizontal and vertical substitution

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  • Ye, Taofeng

Abstract

In this study, we focus on inventory management issues under simultaneously horizontal (equivalently inter-brand) and vertical (equivalently intra-brand) substitution. The analysis is divided into two distinct scenarios: centralized inventory management, where all brands are managed by a central decision maker; and decentralized inventory management, where each brand is managed by an independent decision maker. For the two situations, the optimal and the equilibrium order quantities are developed. Moreover, we find that there exist situations when the order quantities are greater in the centralized setting than in the competitive setting for some products.

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  • Ye, Taofeng, 2014. "Inventory management with simultaneously horizontal and vertical substitution," International Journal of Production Economics, Elsevier, vol. 156(C), pages 316-324.
    • Handle: RePEc:eee:proeco:v:156:y:2014:i:c:p:316-324
    DOI: 10.1016/j.ijpe.2014.06.017
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    References listed on IDEAS

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    Cited by:

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    2. Carina L. Gargalo & Eduardo Pereda Pons & Ana Paula Barbosa-Povoa & Ana Carvalho, 2021. "A Lean Approach to Developing Sustainable Supply Chains," Sustainability, MDPI, vol. 13(7), pages 1-33, March.
    3. Çömez-Dolgan, Nagihan & Tanyeri, Başak, 2015. "Inventory performance with pooling: Evidence from mergers and acquisitions," International Journal of Production Economics, Elsevier, vol. 168(C), pages 331-339.
    4. Li, Zhaolin & Fu, Qi (Grace), 2017. "Robust inventory management with stock-out substitution," International Journal of Production Economics, Elsevier, vol. 193(C), pages 813-826.
    5. Eksler, Leonid & Aviram, Roei & Elalouf, Amir & Kamble, Aakash, 2018. "An EOQ model for multiple products with varying degrees of substitutability," Economics Discussion Papers 2018-77, Kiel Institute for the World Economy (IfW Kiel).
    6. Zhang, Jian & Zhang, Juliang & Hua, Guowei, 2016. "Multi-period inventory games with information update," International Journal of Production Economics, Elsevier, vol. 174(C), pages 119-127.
    7. Zhang, Yi & Hua, Guowei & Wang, Shouyang & Zhang, Juliang & Fernandez, Vicenc, 2018. "Managing demand uncertainty: Probabilistic selling versus inventory substitution," International Journal of Production Economics, Elsevier, vol. 196(C), pages 56-67.
    8. Lu, Fen & Xu, He & Chen, Pengyu & Zhu, Stuart X., 2018. "Joint pricing and production decisions with yield uncertainty and downconversion," International Journal of Production Economics, Elsevier, vol. 197(C), pages 52-62.
    9. Vinod Kumar Mishra & Kripa Shanker, 2017. "Optimal ordering quantities for substitutable items under joint replenishment with cost of substitution," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 27(1), pages 77-104.

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