Skip to main content
SpringerLink
Log in

Fashion-Retailing Inventory Management with Random Supply

  • Chapter
  • First Online:
Analytical Modeling Research in Fashion Business

Part of the book series: Springer Series in Fashion Business ((SSFB))

Abstract

We consider a fashion-retailing inventory problem in this chapter. We focus on exploring the scenario in which the fashion retailer, which is modeled as a newsvendor , places an order for a fashionable product to the fashion supplier with random supply . The retail selling price of a fashionable product is a decreasing function of the supplier’s random supply. We further consider two scenarios regarding the product cost: (i) the procurement case, in which the fashion retailer is a pure retailer; and (ii) the in-house production case, in which the fashion retailer also manufactures the product by itself. The optimal ordering decisions for both cases are determined and compared. Sensitivity analysis is conducted and insights are revealed.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Arreola-Risa A, DeCroix GA (1998) Inventory management under random supply disruptions and partial backorders. Naval Res Logistics 45:687–703

    Article  Google Scholar 

  • Arrow KJ, Karlin S, Scarf H (1958) Studies in the mathematic theory of inventory and production. Stanford University Press, Stanford, CA

    Google Scholar 

  • Bielecki T, Kumar PR (1988) Optimality of zero-inventory policies for unreliable manufacturing systems. Oper Res 36(4):532–541

    Article  Google Scholar 

  • Bollapragada R, Rao US, Zhang J (2004a) Managing inventory and supply performance in assembly systems with random supply capacity and demand. Manage Sci 50(12):1729–1743

    Article  Google Scholar 

  • Bollapragada R, Rao US, Zhang J (2004b) Managing two-stage serial inventory systems under demand and supply uncertainty and customer service level requirements. IIE Trans 36(1):73–85

    Article  Google Scholar 

  • Chao X, Gong X, Zheng S (2014) Optimal pricing and inventory policies with reliable and random-yield suppliers: characterization and comparison. Ann Oper Res. doi:10.1007/s10479-014-1547-0

    Google Scholar 

  • Chen R, Cheng TCE, Choi TM, Wang Y (2016) Novel advances in applications of the newsvendor model. Decis Sci

    Google Scholar 

  • Choi TM (2012) Handbook of newsvendor problems. Springer, New York

    Book  Google Scholar 

  • Choi TM, Chiu CH (2012) Mean-downside-risk and mean-variance newsvendor models: Implications for sustainable fashion retailing. Int J Prod Econ 135:552–560

    Article  Google Scholar 

  • Chopra S, Reinhardt G, Mohan U (2007) The importance of decoupling recurrent and disruption risks in a supply chain. Naval Res Logistics 54(5):544–555

    Article  Google Scholar 

  • Ciarallo FQ, Akella R, Morton TE (1994) A periodic review, production planning model with uncertain capacity and uncertain demand—optimality of extended myopic polices. Manage Sci 40:320–332

    Article  Google Scholar 

  • Dada M, Petruzzi NC, Schwarz LB (2007) A newsvendor’s procurement problem when suppliers are unreliable. Manuf Serv Oper Manage 9:9–32

    Google Scholar 

  • Erdem AS, Fadiloǧlu MM, Özekici S (2006) An EOQ model with multiple suppliers and random capacity. Naval Res Logistics 53(1):101–114

    Article  Google Scholar 

  • Giri BC (2011) Managing inventory with two suppliers under yield uncertainty and risk aversion. Int J Prod Econ 133:80–85

    Article  Google Scholar 

  • Gupta G, He B, Sethi SP (2014) Contingent sourcing under supply disruption and competition. Int J Prod Res. http://dx.doi.org/10.1080/00207543.2014.965351

  • Gurnani H, Akella R, Lehoczky J (2000) Supply management in assembly systems with random yield and random demand. IIE Trans 32(8):701–714

    Google Scholar 

  • Kazaz B (2004) Production planning under yield and demand uncertainty with yield-dependent cost and price. Manuf Serv Oper Manage 6:209–224

    Google Scholar 

  • Kazaz B, Webster S (2011) The impact of yield-dependent trading costs on pricing and production planning under supply uncertainty. Manuf Serv Oper Manage 13:404–417

    Google Scholar 

  • Kazaz B, Webster S (2015) Technical note—price-setting newsvendor problems with uncertain supply and risk aversion. Oper Res 63(4):807–811

    Article  Google Scholar 

  • Khang DB, Fujiwara O (2000) Optimality of myopic ordering policies for inventory model with stochastic supply. Oper Res 48(1):181–184

    Article  Google Scholar 

  • Khouja M (1999) The single-period (news-vendor) problem: Literature review and suggestions for future research. Omega 27(5):537–553

    Article  Google Scholar 

  • Kouvelis P, Milner JM (2002) Supply chain capacity and outsourcing decisions: the dynamic interplay of demand and supply uncertainty. IIE Trans 34(8):717–728

    Google Scholar 

  • Li Q, Zheng S (2006) Joint inventory replenishment and pricing control for systems with uncertain yield and demand. Oper Res 54:696–705

    Article  Google Scholar 

  • Li J, Wang S, Cheng TCE (2010) Competition and cooperation in a single-retailer two-supplier supply chain with supply disruption. Int J Prod Econ 124:137–150

    Article  Google Scholar 

  • Li Q, Dong C, Zhang R (2015) Managing the newsvendor modeled product system with random capacity and capacity-dependent price. Math Prob Eng 2015:10 (Article ID 296132). http://dx.doi.org/10.1155/2015/296132

    Google Scholar 

  • Luo Z, Wang J, Chen W (2015) A risk-averse newsvendor model with limited capacity and outsourcing under the CVaR criterion. J Syst Sci Syst. http://dx.doi.org/10.1007/s11518-015-5263-3

  • Meyer RR, Rothkopf MH, Smith SA (1979) Analysis of a production/inventory system subject to random disruptions. Manage Sci 43(11):1577–1588

    Google Scholar 

  • Moinzadeh K, Aggarwal P (1997) Reliability and inventory in a production-storage system. Manage Sci 25(8):799–807

    Google Scholar 

  • Ockenfels A, Selten R (2015) Impulse balance and multiple-period feedback in the newsvendor game. Prod Oper Manage

    Google Scholar 

  • Okyay HK, Karaesmen F, Ozekici S (2014) Newsvendor models with dependent random supply and demand. Optim Lett 8:983–999

    Article  Google Scholar 

  • O’Neil S, Zhao X, Sun D, Wei JC (2015) Newsvendor problems with demand shocks and unknown demand distributions. Decis Sci

    Google Scholar 

  • Pal B, Sana SS, Chaudhuri K (2015) A distribution-free newsvendor problem with nonlinear holding cost. Int J Syst Sci. http://dx.doi.org/10.1080/00207721.2013.815828

  • Parlar M (1997) Continuous-review inventory problem with random supply interruptions. Eur J Oper Res 99:366–385

    Article  Google Scholar 

  • Parlar M, Berkin D (1991) Future supply uncertainty in EOQ models. Naval Res Logistics 38:107–121

    Article  Google Scholar 

  • Parlar M, Perry D (1995) Analysis of a (Q, r, T) inventory policy with deterministic and random yields when future supply is uncertain. Eur J Oper Res 84:431–443

    Article  Google Scholar 

  • Qin Y, Wang R, Vakharia AJ, Chen Y, Seref MMH (2011) The newsvendor problem: review and directions for future research. Eur J Oper Res 213(2):361–374

    Article  Google Scholar 

  • Ray P, Jenamani M (2014) Sourcing decision under disruption risk with supply and demand uncertainty: a newsvendor approach. Ann Oper Res. doi:10.1007/s10479-014-1649-8

    Google Scholar 

  • Shen B, Choi TM, Wang Y, Lo CK (2013) The coordination of fashion supply chains with a risk-averse supplier under the markdown money policy. IEEE Trans Syst Man Cybern: Syst 43(2):266–276

    Article  Google Scholar 

  • Shen B, Chow PS, Choi TM (2014) Supply chain contracts in fashion department stores: coordination and risk analysis. Math Probl Eng. http://dx.doi.org/10.1155/2014/954235

  • Snyder LV, Atan Z, Peng P, Rong Y, Schmitt AJ, Sinsoysal B (2014) OR/MS models for supply chain disruptions: a review. Working paper, Lehigh University, Bethlehem, PA, USA

    Google Scholar 

  • Tajbakhsh MM, Zolfaghari S, Lee GG (2007) Supply uncertainty and diversification: a review. In: Jung H, Jeong B, Chen FF (eds) Trends in supply chain design and management. Technologies and methodologies. Springer, London

    Google Scholar 

  • Tang SY, Kouvelis P (2011) Supplier diversification strategies in the presence of yield uncertainty and buyer competition. Manuf Serv Oper Manage 13(4):439–451

    Google Scholar 

  • Tomlin B (2006) On the value of mitigation and contingency strategies for managing supply chain disruption risks. Manage Sci 52(5):639–657

    Article  Google Scholar 

  • Tomlin B, Wang Y (2005) On the value of mix flexibility and dual sourcing in unreliable newsvendor networks. Manuf Serv Oper Manage 7(1):37–57

    Google Scholar 

  • Wang YA, Gerchak Y (1996) Periodic review production models with variable capacity, random yield, and uncertain demand. Manage Sci 42:130–137

    Article  Google Scholar 

  • Wu M, Zhu SX, Teunter RH (2013) The risk-averse newsvendor problem with random capacity. Eur J Oper Res 231:328–336

    Article  Google Scholar 

  • Xu M, Lu Y (2013) The effect of supply uncertainty in price-setting newsvendor models. Eur J Oper Res 227:423–433

    Article  Google Scholar 

  • Yan X, Wang Y (2013) An EOQ model for perishable items with supply uncertainty. Math Probl Eng. http://dx.doi.org/10.1155/2013/739425

  • Yano CA, Lee HL (1995) Lot sizing with random yield: a review. Oper Res 43(2):311–334

    Article  Google Scholar 

  • Zipkin PH (2000) Foundations of inventory management. McGraw-Hill, Boston, MA

    Google Scholar 

Download references

Acknowledgments

The authors would like to thank Prof. Tsan-Ming Choi for the helpful suggestions and comments. This research was supported in part by National Natural Science Foundation of China (71501037). It was also supported in part by the Fundamental Research Funds for the Central Universities.

Author information

Authors and Affiliations

  1. Glorious Sun School of Business and Management, Donghua University, 1882 West Yan’an Road, Shanghai, 200051, China

    Qingying Li

  2. School of Business Administration, Zhongnan University of Economics and Law, Wuhan, 430073, China

    Ciwei Dong

  3. China Foreign Exchange Trade System, Building 40, 1387 Zhangdong Road, Shanghai, 201203, China

    Ruixin Zhuang

Authors
  1. Qingying Li
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ciwei Dong
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Ruixin Zhuang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ciwei Dong .

Editor information

Editors and Affiliations

  1. Inst of Textiles & Clothing, Hong Kong Polytechnic Univ, Hung Hom, Hong Kong

    Tsan-Ming Choi

Rights and permissions

Reprints and permissions

Copyright information

© 2016 Springer Science+Business Media Singapore

About this chapter

Cite this chapter

Li, Q., Dong, C., Zhuang, R. (2016). Fashion-Retailing Inventory Management with Random Supply. In: Choi, TM. (eds) Analytical Modeling Research in Fashion Business. Springer Series in Fashion Business. Springer, Singapore. https://doi.org/10.1007/978-981-10-1014-9_7

Download citation

Publish with us

Policies and ethics

Search

Navigation