This paper studies the inventory management problem of dual channels operated by one vendor. Demands of dual channels are inventory-level-dependent.We propose a multi-period stochastic dynamic programming model which shows that under mild conditions, the myopic inventory policy is optimal for the infinite horizon problem. To investigate the importance of capturing demand dependency on inventory levels, we consider a heuristic where the vendor ignores demand dependency on inventory levels, and compare the optimal inventory levels with those recommended by the heuristic. Through numerical examples, we show that the vendor may order less for dual channels than those recommended by the heuristic, and the difference between the inventory levels in the two cases can be so large that the demand dependency on inventory levels cannot be neglected. In the end, we numerically examine the impact of different ways to treat unmet demand and obtain some managerial insights.

This paper studies the eect of risk-aversion in the competitive newsvendor game. Multiple newsvendors with risk-averse preferences face a random demand and the demand is allocated proportionally to their inventory levels. Each newsvendor aims to maximize his expected utility instead of his expected prot. Assuming a general form of risk-averse utility function, we prove that there exists a pure Nash equilibrium in this game, and it is also unique under certain conditions. We nd that the order quantity of each newsvendor is decreasing in the degree of risk-aversion and increasing in the initial wealth. Newsvendors with moderate preferences of risk-aversion make more prots compared with the risk-neutral situation. We also discuss the joint eect of risk-aversion and competition. If the eect of risk-aversion is strong enough to dominate the eect of competition, the total inventory level under competition will be lower than that under centralized decision-making.

This paper studies the capacity allocation game between duopolistic airlines which could offer callable products. Previous literature has shown that callable products provide a riskless source of additional rev- enue for a monopolistic airline. We examine the impact of the introduction of callable products on the revenues and the booking limits of duopolistic airlines. The analytical results demonstrate that, when there is no spill of low-fare customers, offering callable products is a dominant strategy of both airlines and provides Pareto gains to both airlines. When customers of both fare classes spill, offering callable products is no longer a dominant strategy and may harm the revenues of the airlines. Numerical ex- amples demonstrate that whether the two airlines offer callable products and whether offering callable products is beneficial to the two airlines mainly depends on their loads and capacities. Specifically, when the difference between the loads of the airlines is large, the loads of the airlines play the most important role. When the difference between the loads of the airlines is small, the capacities of the airlines play the most important role. Moreover, numerical examples show that the booking limits of the two airlines in the case with callable products are always higher than those in the case without callable products.