Benefits of postponement for fashion products with forecast updates
Name
62313349-MIT.pdf
Description
Full printable version
Size
3.76 MB
Format
Adobe PDF
Checksum (MD5)
c3d9e13d8779cca5e3b60ac57cc80215
Author(s)
Gong, Huiling
Advisor(s)
Yossi Sheffi.
Date Issued
2005
Publisher
Massachusetts Institute of Technology
Abstract
This thesis examines the benefit of postponement of fashion products by considering the overage cost of the intermediate product and the correlation between the demand for each end products produced from it. The benefit of postponement is measured by the percentage increase in maximum expected profit after demand is realized. the production process is modelled as a two stage newsvendor problem and the forecast update path follows an additive martingale. An optimal solution and a myopic solution are proposed to solve this problem. Numerical results indicate that the benefit of postponement decreases with the overage cost of the intermediate product and the correlation between demand for each end products. It becomes less sensitive to the overage cost of the intermediate product when end products are more negatively correlated. It is also less sensitive to the demand correlation between end products when the overage cost of the intermediate product is low. In addition, the benefit of postponement is sensitive to the additional unit costs introduced by postponement. A case study to NFL Jerseys purchase planning indicates that an increase of unit cost by 10% can reduce the benefit of postponement by over 50%.
Description
Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2005.
Includes bibliographical references (leaves 67-69).
Subjects
Engineering Systems Division.
MIT Department
Massachusetts Institute of Technology. Engineering Systems Division
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