Abstract:Resource flexibility, arguably among the most celebrated operational concepts, is known to provide firms facing demand uncertainty with such benefits as risk pooling, revenue-maximization optionality, and operational hedging. In this article we show that resource flexibility mitigates censoring of sales data, and thereby facilitates learning the true demand under a variety of practical settings, demand distributions, and model parameters. This suggests that extant models, which view flexibility only as the abi… Show more
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