RSM270H1 Lecture Notes - Lecture 9: Service Level, Regular Clergy, Car Rental
Document Summary
March 15, 2018: pipeline inventory: en-route inventory; goods that have been shipped but have not yet been bought by consumers. Average pipeline inventory = mean demand over lead time = l * d: inventory position: amount in-hand plus on-order minus backordered quantities and any inventory allocated for special purposes. =inventory on hand + pipeline inventory: if there is uncertainty in demand, have safety stock. Single-item revenue management: uncertain, random, demand, perishable product, fixed costs, want to maximize overall revenue, plane, hotel, car rental reservations, sports tickets, different price classes. Higher paying customers arrive later with uncertain demand: tradeoff of immediate, guaranteed low revenue vs uncertain future high revenue. Revenue management: maximize revenue by matching fixed supply with uncertain demand. Newsvendor problem: minimize overall costs to maximize profit, tradeoff of cost of overstocking vs cost of understocking.
