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Analysis of monitoring and limiting of commercial cheating: a newsvendor model

Author

Listed:
  • K Liu

    (Chinese Academy of Sciences)

  • J-A Li

    (City University of Hong Kong)

  • Y Wu

    (University of Southampton)

  • K K Lai

    (City University of Hong Kong)

Abstract

Commercial cheating, that is, counterfeit products and lower quality products sold as genuine products, exists extensively in many countries of the world, especially in the developing countries. In this paper, we investigate the phenomena of commercial cheating, study the optimal cheating actions of inventory managers under a monitoring and limiting regime from the industrial administration office (IAO for short) and demonstrate the efficiency of monitoring and limiting such cheating activities. A newsvendor model has been considered for the inventory manager to order different quality products with different set-up costs. The model, a kind of extension of the general newsvendor problem, is viewed as a shocked inventory model. We analyse some properties of the optimal cheating policies from the point of view of an inventory manager, and investigate the effectiveness of both the punishment level and the checking rate.

Suggested Citation

  • K Liu & J-A Li & Y Wu & K K Lai, 2005. "Analysis of monitoring and limiting of commercial cheating: a newsvendor model," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(7), pages 844-854, July.
    • Handle: RePEc:pal:jorsoc:v:56:y:2005:i:7:d:10.1057_palgrave.jors.2601913
    DOI: 10.1057/palgrave.jors.2601913
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    References listed on IDEAS

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    Cited by:

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    3. Jeremy M Wilson & Clifford Grammich & Fiona Chan, 2016. "Organizing for brand protection and responding to product counterfeit risk: An analysis of global firms," Journal of Brand Management, Palgrave Macmillan, vol. 23(3), pages 345-361, May.
    4. Soo-Haeng Cho & Xin Fang & Sridhar Tayur, 2015. "Combating Strategic Counterfeiters in Licit and Illicit Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 17(3), pages 273-289, July.
    5. Hu, Shu & Fu, Ke & Wu, Tong, 2021. "The role of consumer behavior and power structures in coping with shoddy goods," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).

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