The role of inventory in delivery-time competition
Management Science
Information distortion in a supply chain: the bullwhip effect
Management Science - Special issue on frontier research in manufacturing and logistics
Centralization of Stocks: Retailers Vs. Manufacturer
Management Science
Estimating characteristics of queueing networks using transactional data
Queueing Systems: Theory and Applications
The Censored Newsvendor and the Optimal Acquisition of Information
Operations Research
Analysis of a Forecasting-Production-Inventory System with Stationary Demand
Management Science
Inventory Competition Under Dynamic Consumer Choice
Operations Research
Centralized and Competitive Inventory Models with Demand Substitution
Operations Research
Commissioned Paper: Capacity Management, Investment, and Hedging: Review and Recent Developments
Manufacturing & Service Operations Management
Manufacturing & Service Operations Management
Knowledge risks in organizational networks: An exploratory framework
The Journal of Strategic Information Systems
Manufacturing & Service Operations Management
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Motivated by a $2.2 billion inventory write-off by Cisco Systems, we investigate how duplicate orders can lead a manufacturer to err in estimating the demand rate and customers' sensitivity to delay, and to make faulty decisions about capacity investment. We consider a manufacturer that sells through two distributors. If a customer finds that his distributor is out of stock, then he will sometimes seek to make a purchase from the other distributor; if the latter is also out of stock, the customer will order from both distributors. When his order is filled by one of the distributors, the customer cancels any duplicate orders. Furthermore, the customer cancels all of his outstanding orders after a random period of time. Assuming that the manufacturer is unaware of duplicate orders, we prove that she will overestimate both the demand rate and the cancellation rate. Surprisingly, failure to account for duplicate orders can cause short-term underinvestment in capacity. However, in long-term equilibrium under stable demand conditions the manufacturer overinvests in capacity. Our results suggest that Cisco's write-off was caused by estimation errors and cannot be blamed entirely on the economic downturn. Finally, we provide some guidance on estimation in the presence of double orders.