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Product variety arising from hedging in the fashion supply chains

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Product variety arising from hedging in the fashion supply chains. / Vaagen, Hajnalka; Wallace, Stein W.
In: International Journal of Production Economics, Vol. 114, No. 2, 08.2008, p. 431-455.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Vaagen, H & Wallace, SW 2008, 'Product variety arising from hedging in the fashion supply chains', International Journal of Production Economics, vol. 114, no. 2, pp. 431-455. https://doi.org/10.1016/j.ijpe.2007.11.013

APA

Vaagen, H., & Wallace, S. W. (2008). Product variety arising from hedging in the fashion supply chains. International Journal of Production Economics, 114(2), 431-455. https://doi.org/10.1016/j.ijpe.2007.11.013

Vancouver

Vaagen H, Wallace SW. Product variety arising from hedging in the fashion supply chains. International Journal of Production Economics. 2008 Aug;114(2):431-455. doi: 10.1016/j.ijpe.2007.11.013

Author

Vaagen, Hajnalka ; Wallace, Stein W. / Product variety arising from hedging in the fashion supply chains. In: International Journal of Production Economics. 2008 ; Vol. 114, No. 2. pp. 431-455.

Bibtex

@article{3cbf08aad22849189e1ce9f0752aa4e3,
title = "Product variety arising from hedging in the fashion supply chains",
abstract = "Consider a well-defined fashion apparel category, where the variants are distinguished by style and colour, and are subject to two equally likely states of the world: State1 when some variants become popular and others unpopular, and State2 when the reverse takes place. We analyse the optimal portfolio and variety arising from hedging against uncertainty triggered by the states, by integrating the Markowitz and the Newsboy models, while carefully considering demand correlations. We show that due to the complex structure of the uncertainty, building hedging portfolios with competing items is necessary for optimality. We also show how mis-specifying the distributions can lead to very bad trade-offs between risk and expected profit, caused by a lack of proper hedging.",
keywords = "Fashion, Newsboy , Mean variance , Hedging , Correlations , Bi-modal distributions",
author = "Hajnalka Vaagen and Wallace, {Stein W}",
year = "2008",
month = aug,
doi = "10.1016/j.ijpe.2007.11.013",
language = "English",
volume = "114",
pages = "431--455",
journal = "International Journal of Production Economics",
issn = "0925-5273",
publisher = "Elsevier Science B.V.",
number = "2",

}

RIS

TY - JOUR

T1 - Product variety arising from hedging in the fashion supply chains

AU - Vaagen, Hajnalka

AU - Wallace, Stein W

PY - 2008/8

Y1 - 2008/8

N2 - Consider a well-defined fashion apparel category, where the variants are distinguished by style and colour, and are subject to two equally likely states of the world: State1 when some variants become popular and others unpopular, and State2 when the reverse takes place. We analyse the optimal portfolio and variety arising from hedging against uncertainty triggered by the states, by integrating the Markowitz and the Newsboy models, while carefully considering demand correlations. We show that due to the complex structure of the uncertainty, building hedging portfolios with competing items is necessary for optimality. We also show how mis-specifying the distributions can lead to very bad trade-offs between risk and expected profit, caused by a lack of proper hedging.

AB - Consider a well-defined fashion apparel category, where the variants are distinguished by style and colour, and are subject to two equally likely states of the world: State1 when some variants become popular and others unpopular, and State2 when the reverse takes place. We analyse the optimal portfolio and variety arising from hedging against uncertainty triggered by the states, by integrating the Markowitz and the Newsboy models, while carefully considering demand correlations. We show that due to the complex structure of the uncertainty, building hedging portfolios with competing items is necessary for optimality. We also show how mis-specifying the distributions can lead to very bad trade-offs between risk and expected profit, caused by a lack of proper hedging.

KW - Fashion

KW - Newsboy

KW - Mean variance

KW - Hedging

KW - Correlations

KW - Bi-modal distributions

U2 - 10.1016/j.ijpe.2007.11.013

DO - 10.1016/j.ijpe.2007.11.013

M3 - Journal article

VL - 114

SP - 431

EP - 455

JO - International Journal of Production Economics

JF - International Journal of Production Economics

SN - 0925-5273

IS - 2

ER -