Jonathan Landy

Here, we review the time value of money concept and its application to optimizing marketing (or other asset investment) spend. Time value of money A popular lifetime value (LTV) variant is built on top of the "time value of money" concept. Essentially thi

A regression fit can sometimes look surprisingly poor when plotted on top of data, with the two having visually different slopes. The reason is that the line that visually seems to go through the data best is that which minimizes total projection error, w

Here, we consider the problem of allocating limited inventory across demand sites, given the availability of a lower-quality substitute that can be used when inventory runs out. We find that it can be optimal to send the premium item to only a subset of l

We ask at which floors we should place a set of idle elevators in a building so as to minimize the expected wait time of the next caller. If there is just one elevator, we show that it should be placed at the "median of the demand distribution" - i.e., it

When steady traffic limits the speed on a road, we argue that its throughput becomes independent of traffic density. As a result, the time required to reach a destination depends only on the number of cars ahead. In this regime, a road behaves much like a

Forecast error leads to misallocation of inventory across demand channels, driving lost sales. For example, for a product with (100) units of demand split across two channels, we find that relying on a single prior sales cycle to guide allocation leads to

Brands often sell through both the direct-to-consumer (DTC) and wholesale channels, with demand in each uncertain before the season starts. Wholesale orders happen first at a lower price, and whatever inventory remains goes to DTC. This introduces a key g

Retailers prefer to carry products that have both high expected demand and low demand uncertainty. Unfortunately, these are competing concerns, and so it's not always obvious which product to choose when one option has both higher expected demand and high

We consider the problem of allocating a fixed inventory across multiple locations. To maximize expected sales, units should be distributed so that each site reaches the same sell-through probability. Interestingly, this implies we should often send more u

E-commerce apparel return rates today average around 20% - but this average is rising, and rates on individual products vary widely. In this post, we introduce simple equations to estimate an item's expected profit and margin based on its return rate, dam