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Optimal Assortment and Inventory Decisions with Multiple Quality Levels
 

Summary: Optimal Assortment and Inventory Decisions
with Multiple Quality Levels
Maria E. Mayorga
Department of Industrial Engineering, Clemson University
Clemson, SC 29634, mayorga@clemson.edu
Hyun-Soo Ahn
Ross School of Business, University of Michigan
Ann Arbor, MI 48109, hsahn@bus.umich.edu
Goker Aydin
Department of Industrial and Operations Engineering, University of Michigan
Ann Arbor, MI 48109, ayding@umich.edu
February 18, 2008
Abstract
We consider the assortment and inventory decisions of a retailer under a locational choice
model where products can be differentiated both horizontally (e.g., color of earphones) and
vertically (e.g., sound quality of earphones). The assortment and quantity decisions affect
customer choice and, hence, the demand and sales for each product. In this paper, we investigate
three different environments where product availability and assortment affect consumer choice
and demand in different ways: make-to-order, make-to-stock with static substitution, and make-
to-stock with dynamic substitution. In the make-to-order environment, customers purchase

  

Source: Aydin, Goker - Department of Operations and Decision Technologies, Indiana University Bloomington

 

Collections: Engineering