Daniel Corsten

Structural Estimation of the Effect of Out-of-Stocks

We develop a structural demand model that endogenously captures the effect of out-of-stocks on customer choice by simulating a time-varying set of available alternatives. Our estimation method uses store-level data on sales and partial information on product availability. Our model allows for flexible substitution patterns, which are based on utility maximization principles and can accommodate categorical and continuous product characteristics. The methodology can be applied to data from multiple markets and in categories with a relatively large number of alternatives, slow-moving products, and frequent out-of-stocks (unlike many existing approaches). In addition, we illustrate how the model can be used to assist the decisions of a store manager in two ways. First, we show how to quantify the lost sales induced by out-of-stock products. Second, we provide insights on the financial consequences of out-of-stocks and suggest price promotion policies that can be used to help mitigate their negative economic impact, which run counter to simple commonly used heuristics.

Exzellenz durch Nachhaltigkeit im Einkauf

Immer langer werdende Wertschopfungsketten sind an der Herstellung eines Produktes beteiligt. Henry Ford besas noch seine eigenen Eisenerzwerke und damit die Kontrolle uber die gesamte Wertschopfungskette eines Autos. Heute fuhren Automobilhersteller lediglich 20–40% aller Verarbeitungsschritte zur Produktion eines Autos durch. Die Qualitat der Autos wird somit zunehmend von der Produktion der Lieferanten und immer weniger von jener der eigentlichen Automobilhersteller bestimmt. Ahnliches lasst sich in anderen Industrien beobachten. Dell lasst seine Lieferanten zunehmend umfassende Produktmodule produzieren. Bei dem Textilhersteller Tommy Hilfiger ist sogar der gesamte Produktionsprozess an die Lieferanten ausgelagert. Hier beeinflusst die Strategie des Einkaufs bereits vollstandig die Qualitat des Endproduktes.

Financial and Operational Risk Management in the Gold Mining Industry

Financial and operational risk management are central concepts at the intersection of finance, operations, and commodity risk management. Prior research has examined the effects of either financial or operational risk management, yet evidence on the implications for a joint risk management strategy is lacking. We use a fine-grained data set comprising the financial and operational risk management decisions of 58 gold miners from 2003 to 2011 to empirically assess the effects of risk management on inventory. Faced with volatile output prices, gold miners may commit to sell future gold production and lock in prices, but this strategy precluded miners from benefiting from increasing gold prices. They may also manage costs by varying the quality of ore they extract and process, but this is associated with an increase in inventory. We find that the strategies force miners to make financial and operational trade-offs, but that joint implementation of the two may negate these consequences.

Linking Commodity Price Risk and Operations: Evidence from the Gold Mining Industry

Analytical research has suggested a link between financial and operational risk management and its impact on operational outcomes. In this chapter, we use the gold mining industry as an empirical context to explore the effects of risk management on inventory. Gold miners manage risk 1) financially by committing to sell gold through forward contracts and sold call options and 2) operationally by varying the grade of gold they process. We find that gold commitments and variable grading have clear effects on gold inventory, and that they could be viewed as complementary risk management strategies.