Date: April 25, 2014
Time: 10:00 am
Venue: Room 1004, Administration Building, Zijingang Campus
Speaker: Associate Prof. ZHU kaijie, Chinese University of Hong Kong (CUHK)
Topic: Improving DVD-by-Mail Operations with Accurate Forecasts
Host:Prof. ZHOU Weihua, Associate Dean of ZJUSOM
Abstract: In this paper we propose new forecast and inventory control methods for DVD-by-mail operations. DVD-by-mail has a unique operational process. The service starts when a customer createsan online rental queue on the service provider's website. This online queue contains valuable futuredemand information. Based on this unique feature, we devise a dynamic item-level DVD returnand demand forecast model. We then model the DVD inventory operations as a service-constrainedmulti-item inventory control problem with two-sided fixed costs, and formulate it as an integer program. To tackle the computational challenge, we propose and compare two approximate solutions:a dynamic program solution and a greedy heuristic. Our benchmark study shows that the dynamicprogram solution is superior to the greedy heuristic, achieving the minimum cost in all numericalscenarios. To evaluate the performance of our forecast and inventory control methods, we conductan extensive simulation study. Our simulation results suggest that the dynamic program solutionoutperforms the greedy heuristic, and, more importantly, our forecast model plays a crucial rolein improving the cost performance. We also find that the dynamic program solution based onartificially lowered two-sided costs can further improve the cost performance in the multi-periodsimulation. In addition, we find that the combined value of our forecast and inventory controlmethods increases with service level requirements, but is relatively insensitive to customers' DVDreturn speed; these features are all desirable in practical implementations.
About Speaker: Zhu Kaijie is an Associate Professor in Department of Decision Sciences and Managerial Economics and the director of MSc in Business Analytics at Chinese University of Hong Kong (CUHK). He received his Ph.D. degree in Management Science and Engineering from Stanford University in 2002, and his Master and Bachelor degrees in Automatic Control from Shanghai Jiao Tong University in 1996 and 1993, respectively. Prior to joining CUHK, Dr. Zhu worked as an Assistant and then Associate Professor at Hong Kong University of Science and Technology from 2002 to 2010 and a pre-professional intern at T. J. Watson Research Center of IBM in 2000. He has research interests in global supply chain management, and his publications have been published or accepted by Management Science, Operations Research, Manufacturing & Services Management, Production and Operations Management, Naval Research Logistics, and European Journal of Operational Research.
