Inventory Decisions to Manage Profits under Accrual Accounting
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Date: 01-08-2008
Start Time:
1:00pm
End Time: 2:00pm
Speaker: Candace Yano, University of California - Berkeley
Location: Uris 333
ABSTRACT
This research was motivated by concerns of corporate managers in
meeting analysts' earnings estimates and the fact that stock prices
fall disproportionately when companies miss their targets. To
capture this effect, we incorporate period-by-period chance constraints
on meeting profit targets into a multi-period inventory model in which
the objective is to maximize expected profit. Corporate profits
are reported on an accrual, rather than cash, basis, so we use accrual
accounting in our model.
We provide a characterization of the optimal policy for this problem,
which includes the possibility of disposal. We also compare the
chance-constrained approach with the mean-variance and
conditional-value-at-risk (CVaR) approaches and show that the latter
two approaches lead to problems that are extremely difficult to solve
and do not perform well from a profitability viewpoint.
This is joint work with Houmin Yan of the Chinese University of Hong Kong and Hanqin Zhang of the Chinese Academy of Sciences.
BIO
Candace ("Candi") Yano is a Professor in the Department of
Industrial Engineering and Operations Research (IEOR) and in the Haas
School of Business at the University of California, Berkeley,
California. During the 2003-4 academic year, she was also affiliated
with the Krannert School of Management at Purdue University, as the
Susan B. Butler Visiting Chair of Operations Management. From 1995 to
2001, she served as Chair of the IEOR Department at Berkeley. She holds
an A.B. in Economics, a M.S. in Operations Research, and a M.S. and
Ph.D. in Industrial Engineering from Stanford University. She held
positions at Bell Telephone Laboratories and the University of Michigan
prior to joining Berkeley.
Professor Yano's primary research interests are production, inventory
and logistics management, as well as interdisciplinary problems
involving manufacturing and marketing. She is currently the Editor of
the Focused issues on Scheduling and Logistics of IIE Transactions, and
a Department Editor for the Operations and Supply Chain Department of
Management Science, among other editorial posts.