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Newsvendors Tackle the Newsvendor Problem

Author

Listed:
  • Martin A. Koschat

    (TDS–AOL Time Warner, Sports Illustrated Building, 7th Floor, 135 West 50th Street, New York, New York 10020-1201)

  • Glorian L. Berk

    (TDS–AOL Time Warner, Sports Illustrated Building, 7th Floor, 135 West 50th Street, New York, New York 10020-1201)

  • Jeffrey A. Blatt

    (TDS–AOL Time Warner, Sports Illustrated Building, 7th Floor, 135 West 50th Street, New York, New York 10020-1201)

  • Nancy M. Kunz

    (TDS–AOL Time Warner, Sports Illustrated Building, 7th Floor, 135 West 50th Street, New York, New York 10020-1201)

  • Michael H. LePore

    (TDS–AOL Time Warner, Sports Illustrated Building, 7th Floor, 135 West 50th Street, New York, New York 10020-1201)

  • Sam Blyakher

    (McKinsey & Company, 55 East 52nd Street, New York, New York 10022)

Abstract

In 1998, the retail sales and marketing division of Time Inc., the largest publisher of consumer magazines in the US, reviewed its newsstand distribution principles and procedures for its magazines. This review affected the three major distribution decisions: the evaluation of each magazine's national print order, the wholesaler allotment procedure, and the store distribution process. For this three-echelon distribution problem, we had to adapt well-known formal solutions so that they could be implemented within the constraints of the magazine distribution channel. The revised process, referred to as Time Inc.'s Draw Management Program, has generated incremental profits in excess of $3.5 million annually.

Suggested Citation

  • Martin A. Koschat & Glorian L. Berk & Jeffrey A. Blatt & Nancy M. Kunz & Michael H. LePore & Sam Blyakher, 2003. "Newsvendors Tackle the Newsvendor Problem," Interfaces, INFORMS, vol. 33(3), pages 72-84, June.
    • Handle: RePEc:inm:orinte:v:33:y:2003:i:3:p:72-84
    DOI: 10.1287/inte.33.3.72.16010
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    References listed on IDEAS

    as
    1. Maurice E. Schweitzer & Gérard P. Cachon, 2000. "Decision Bias in the Newsvendor Problem with a Known Demand Distribution: Experimental Evidence," Management Science, INFORMS, vol. 46(3), pages 404-420, March.
    2. Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
    3. Martin Koschat & William Putsis, 2000. "Who Wants You When You're Old and Poor? Exploring the Economics of Media Pricing," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 215-232.
    4. Edward I. Brody, 2001. "Marketing Engineering at BBDO," Interfaces, INFORMS, vol. 31(3_supplem), pages 74-81, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. John Maleyeff, 2014. "Quantifying the Value of Flexibility in Supply Chains for High-Risk Products," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 5(2), pages 16-24, May.
    2. Cunha, Claudio Barbieri & Mutarelli, Fernando, 2007. "A spreadsheet-based optimization model for the integrated problem of producing and distributing a major weekly newsmagazine," European Journal of Operational Research, Elsevier, vol. 176(2), pages 925-940, January.
    3. Koschat, Martin A., 2008. "Store inventory can affect demand: Empirical evidence from magazine retailing," Journal of Retailing, Elsevier, vol. 84(2), pages 165-179.
    4. Weerahandi, Samaradasa & Koschat, Martin A., 2007. "Experimentation on heterogeneous experimental units," Statistics & Probability Letters, Elsevier, vol. 77(11), pages 1077-1083, June.

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