Selling over an Uncertain Season: Scale and Timing of Inventory Availability

Abstract

Unknown customer demand patterns are a significant challenge for many firms. This is particularly true for seasonal products, that oftentimes do not only suffer from an uncertain demand scale, but also from an uncertain demand timing. To ensure a product’s profitability under such adverse market conditions, firms have to coordinate a product’s inventory scale with the inventory timing. Motivated by this commonly observed challenge, we address the following question: For a seasonal product, when and how much inventory should a firm stock to best satisfy uncertain customer demand over an uncertain selling season? Our analysis reveals that to be successful, firms have to actively manage a tradeoff between the product’s market potential and the product’s costly market time. We also find that the timing uncertainty impedes an effective synchronization between the product’s selling season and its availability period. We discuss important managerial implications arising from these findings.

About the presenter

Jochen Schlapp is currently an Assistant Professor at the University of Mannheim and a Permanent Visiting Scholar at INSEAD. Prior to this appointment, he has been a Visiting Researcher at INSEAD. He holds a Ph.D. in Operations Management from the University of Mannheim, an M.Phil. in Management Science from Cambridge University, and an B.Sc. in Industrial Engineering from TU Darmstadt. His research interests are in the field of new product development and operations management, with a specific focus on organizational challenges (such as incentive conflicts) and on the timing of decisions under uncertainty.

More info about Prof. Jochen Schlapp

About the Seminar

The KLU research seminar series is a regular meeting of PhD students, Post-Docs and professors who conduct research in the field of logistics and supply chain management. The research seminar is open to the public and we happily welcome guests.