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Title:Assortment planning in supply chains
Author(s):Xu, Juan
Director of Research:Wang, Qiong
Doctoral Committee Chair(s):Chen, Xin
Doctoral Committee Member(s):Seshadri, Sridhar; Sun, Ruoyu
Department / Program:Industrial&Enterprise Sys Eng
Discipline:Industrial Engineering
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Assortment Planning
Two-Tier Supply Chain
Non-Cooperative Game
Inventory Planning
Abstract:Due to state regulations, beer and soft drink manufacturers must sell their products through a single wholesaler in a geographical area in the U.S., which is referred to as a two-tier supply chain. In such a two-tier supply chain, manufacturers compete by assortments and/or wholesale prices. The wholesaler sets the optimal market prices of products from all manufacturers. Assortment planning under discrete choice models has been broadly studied, but these papers usually assume the setting of direct selling where there is no middleman's decision involved. In this thesis, by considering the wholesaler's market price optimization, we discuss the assortment competition or joint pricing and assortment competition among manufacturers in a two-tier supply chain. First, we assume the end consumers' choice behavior is governed by the Multinomial Logit (MNL) model. From the manufacturers' perspective, we formulate their assortment competition and joint pricing and assortment competition as Nash games, prove the structures of the best responses, and show the existence of a pure-strategy Nash equilibrium for each game. A numerical study has been conducted to discuss how the existence of a wholesaler influences each competing manufacturer's profit, the assortment equilibrium, and the end consumers' expected utility. Second, continuing with the two-tier supply chain, when a manufacturer sells multiple categories of products, or each manufacturer's brand name effect cannot be ignored, we use the Nested Logit (NL) model to describe the consumers' purchase behavior. We study a monopoly setting where there is only one manufacturer in a two-tier supply chain, and provide efficient approaches to solve the assortment planning (and pricing) problem without or with cardinality constraints. We also discuss an oligopoly setting where multiple manufacturers compete by assortments (and wholesale prices) in a two-tier supply chain, and determine the best responses and the existence of a pure-strategy Nash equilibrium in such games. Assortment and inventory decisions are important for a retailer when frequently changing assortments is not possible. Different from the aforementioned two-tier supply chain, we also consider a joint assortment and inventory planning problem under different scenarios in the setting of direct selling. The deterministic part of the demand is modeled by the MNL model and the stochastic part is multiplicative. We prove the structure of the optimal assortment and the optimal order quantities when the demand information is perfect. When the distribution of the stochastic part is unknown, we determine the assortment and inventory solutions to maximize the worst-case profit. When the attraction factors in the deterministic part are from a rectangular uncertainty set, we formulate a max-min problem for the retailer who wants to maximize the worst-case profit by determining an assortment and order quantities, and provide the upper bound and the lower bound for the max-min problem.
Issue Date:2021-07-07
Rights Information:Copyright 2021 Juan Xu
Date Available in IDEALS:2022-01-12
Date Deposited:2021-08

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