Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 23, 2014 erstellt
Description:
The online movie rental industry in the United States has been growing at a rapid pace during the past decade. Netflix and Blockbuster are two prime examples of companies that operate in this arena, each with a large base of subscribers. Two standard methods for movie delivery are employed by these companies: streaming and DVD-by-mail services. While the industry is clearly undergoing a transition into streaming service, a substantial fraction of subscribers continues to prefer the more traditional DVD-by-mail service. In this paper, we will study the problem of how to efficiently manage DVD-by-mail service.An essential task in the solution of our problem is a proper modeling of subscriber demand. We will therefore first develop a demand formulation, which is based on data from Blockbuster. This formulation is then used to construct a nonlinear mathematical program for making the following decisions for the rental companies: (i) the initial order quantity of a new movie (DVD) title and (ii) the shipment size of the title for every period (i.e., day) after its release. Based on the structure of this mathematical program, we develop a policy that is shown to be potentially optimal through extensive computational experiments. The policy is simple, easy-to-understand, and easily implementable in practice