Inventory management literature suggests that product variety may negatively affect inventory turnover. However, little empirical evidence exists to support such a relationship. Inventory turnover is the ratio of sales to inventory, thus, the impact of product variety on both sales and inventory should be considered. Marketing literature indicates that increased product variety helps to increase sales, whereas operations management literature proposes that increased product variety leads to higher inventory levels due to a loss of risk pooling. Given that increased product variety leads to higher sales and higher inventory levels, the change in the ratio of sales to inventory (inventory turnover) in response to increased product variety is unclear theoretically and therefore more of an empirical question. In this study, we explore the impact of product variety on inventory turnover using a balanced panel data set. We find that, in general, product variety negatively affects inventory turnover, but this negative impact may disappear when demand variability is low. Our findings provide an explanation for the lack of conclusive empirical evidence supporting the negative influence of product variety on inventory turnover. Product variety may be found not to negatively affect inventory turnover as it may have a similar influence on sales and inventory levels when demand variability is low. The study also offers managerial suggestions on product variety decisions and inventory management.
Keywords: Inventory theory | Inventory turnover | Product variety | Demand variability

We consider a multi-item newsvendor problem with side constraints and common continuous demand distributions that are bounded implying that the items’ profit functions are nondifferentiable. In particular we focus on the cases of uniform and triangular distributions. These distributions naturally describe demand that is guaranteed to exceed a certain threshold – for example, consumption of basic food products or electric power consumption over any given day. Moreover, in practice, it is often difficult to estimate the demand distribution. Accordingly, the uniform and triangular distributions become default modeling choices when only information regarding the bounds and possibly the mode of the distribution is known. We generalize a previous quadratic programming model for uniformly distributed demand on to allow a to be nonzero and to allow the order quantity to be smaller than a. We study the corrected model and propose an efficient algorithm for determining an optimal solution. The algorithm is motivated by a structural result of an upper bound on the number of guaranteed shortage products, which typically appear in multiproduct settings with a positive demand distribution lower bound. The performance of our specialized algorithm is compared to that achieved when solving our formulation with a piecewise quadratic objective using a state-of-the-art standard solver. We also extend the modeling technique to propose a nonlinear programming formulation for triangular demand distributions. A similar approach can be adopted to approximate other demand distributions with a possibly non-finite support, such as truncated normal with strictly positive lower bounds.
keywords: Logistics |Inventory management |Multi-item newsvendor |Quadratic programming |Convex programming

Consumers may return a product for a variety of reasons, such as the product having the wrong color or size, having poor functionality, being damaged during shipment, or simply prompting regret for an impulsive purchase. Retailers generally provide lenient return policies not only because they may signal high quality but also because they act as risk relievers for consumers’ purchasing decision processes. However, increasing product returns have become particularly challenging for the efficient management of inventory. As such, at the crux of a holistic inventory model lies the understanding of consumer return behavior. In this study, we introduce a variant of the classical single-period inventory (newsvendor) model with returns, in which heterogeneous consumers decide, based on their post-purchase valuation of the product, whether to return the product after using it. From the perspective of the retailer, such deliberate returns may abuse the return policy, which in turn may exacerbate reverse logistics and environmental costs. To that end, we incorporate demand uncertainty and consumer valuation uncertainty by explicitly gauging return probabilities and differentiated salvage values into a newsvendor model. We derive analytical results for the profit-maximizing order quantity for a single-period product that comes with a retailer return policy and exclusively identify the impact of return type as abused or normal. Also offered are closed-form optimal solutions in the cases where market demand is exponentially or uniformly distributed. Structural and numerical results lend managerial insight into how optimal ordering amount, profit, return rates and salvage values change with the price, return window, and hassle cost of returning the product.
keywords: Inventory management |Consumer behavior |Product returns |Fraudulent proclivity |Uncertain demand |Return policy

Prior research on inventory management for imperfect items assumes that such items can be dealt with through salvage or rework. Increased repair costs and decreased production costs arising from modern production processes (e.g. miniaturization, 3D printing), however, have led suppliers to increasingly eschew such solutions in favor of items and components which are discarded upon failure rather than being reworked or scrapped. In this paper, we first determine optimal supplier and buyer inventory policies for items which fail and which cannot be reworked. We then develop a supply chain coordination mechanism which uses a common replenishment time to coordinate a supply chain consisting of a single supplier and n buyers. Our coordination mechanism yields a global minimum for system-wide costs. Numerical examples are provided to illustrate important conditions under which our model is particularly effective at reducing system-wide costs.
keywords: Inventory |Supply chain coordination |Supply chain management

We investigate how changes in the availability of bank credit influence how public firms man age their working capital, which is essential to their operations. In doing so, we provide an en hanced understanding of what significantly influences corporate working capital management. We find that changes in the availability of bank credit significantly influence a number of as pects of a firms working capital policies, and these effects often differ across firms that are more or less dependent on bank financing. Interestingly, our evidence points to the importance of the changing mix of U.S. companies for working capital practices.
Keywords: Bank credit ، Working capital management ، Cash management ، Inventory management ،Trade credit ، Supply chain financing