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Access Type
WSU Access
Date of Award
January 2022
Degree Type
Dissertation
Degree Name
Ph.D.
Department
Industrial and Manufacturing Engineering
First Advisor
Evrim Dalkiran
Second Advisor
Ratna B. Chinnam
Abstract
Automotive original equipment manufacturers (OEMs) are putting a lot of effort into maintaining an efficient order catalog to offer better products to their customers in maketo-stock (MTS) markets. While product “assortment planning" research grows to more effectively identify the best assortments for OEMs, the existing configurable assortment planning literature ignores a significant dimension: the impact of distribution channels, especially dealer franchise networks. Dealers face unique challenges in trying to best satisfy the choice preferences of their local consumers by balancing their limited product configuration inventory with profitability. In many predominantly MTS automotive markets such as the U.S., the reality is that most dealers can only afford to carry a minute fraction of the buildable configurations available from the OEM. This is true even if we were to account for possible vehicle trades among the dealers. To the best of our knowledge, this is the first study that investigates the impact of the dynamics of franchise dealer networks and considers the dealer network response in the assortment planning of automotive OEM. The problem is solved as a “Stackelberg” game, considering OEM as the “leader” that first announces the product assortment and dealers as “followers” that respond with a product inventory management policy. However, the problem cannot be solved as a singleshot model due to the complexity and intractability of the joint OEM and dealer network setting. Instead, we rely on an iterative approach. First, we seek to understand the dealer network inventory management “response function” given the OEM’s product assortment. Then, given the dealer network’s response function, we seek to optimize the OEM’s product assortment. The process is repeated to identify the dealer network’s optimal response until there is convergence that leads to a Stackelberg game equilibrium, where the interests of both the OEM and the dealer network are aligned (at least locally, at the equilibrium). While understanding the dealer network response, we thoroughly investigate the critical factors affecting the decisions, which is beneficial for making managerial decisions by OEMs.
Recommended Citation
Balasooriya, Madagedara Maduka Rushanjalee, "Automotive Product Assortment Planning With Consideration Of Distribution Channel Dynamics" (2022). Wayne State University Dissertations. 3729.
https://digitalcommons.wayne.edu/oa_dissertations/3729