Inventory and capacity planning models generally take the time of sale as something that is exogenously given. For example, the story associated with the well-known newsvendor model is one of stocking for an upcoming selling season that will happen x units of time from now, where x is exogenous. In this paper, we re-visit the capacity planning decision by assuming that demand follows a stochastic process and study what happens when both the time of sale and capacity are decisions. When the selling price is fixed, our baseline case, we find that the optimal time to sell is either now or never. In contrast, when the selling price is stochastic, the optimal time to serve demand is somewhere between now and never. Thus, we link timing preference to two primary sources: uncertainty in demand and uncertainty in the selling price. Our results are useful whenever firms have considerable control over timing, such as in events when firms launch new products or in instances when there is no apparent selling season.
Advances in Supply Chain Finance and FinTech Innovations examines three themes:
Financing Issues in Supply Chains look into popular working capital management financing practices: trade credits and guarantor practices including advanced trade credit practices in supply chains, guarantor financing practices for capital constrained retailers, and innovative practices of joint financing of capital constrained firms by a bank.
FinTech Innovations for Supply Chains examines business model innovations for supply chain financing supported through new platform technologies (such as blockchain), and simple financial technologies effectively implemented for high impact in supply chain risk management.
Advances in Risk Management of Operational Systems provide state-of-the art thinking on many risk issues in supply chain operations including disruption strategies over the product life cycle, the production planning complexities for a capital constrained manufacturer that uses Inventory Based Financing (IBF) scheme to fund its working capital needs, capacity procurement decision, capacity planning in the presence of demand and price uncertainty, and valuing complex real options in dynamic operational settings.
Foundations and Trends® in Technology, Information and Operations Management, Volume 14, Issue 1-2 Special Issue: Advances in Supply Chain Finance and FinTech Innovations
See the other articles that are also part of this special issue.