Repeated commit-or-defer decisions with a deadline: The influenza vaccine composition
Seasonal products have an effective inventory deadline, a time by which the inventory must be ready to distribute. The deadline creates an incentive to start early with production. However, opportunities to gather information that might change production decisions provide an incentive to defer the start of production. We study the resultant dynamic decision problem with alternatives that commit to one of several courses of action now and an alternative to defer the commitment to gather more information about the possible consequences of each alternative. The deadline increases the effective cost of gathering information because that cost includes the value sacrificed by reducing the time available to produce inventory. We frame our model using the annual influenza vaccine composition decision: deciding between strains of the virus to include, which must happen in the spring to allow time for vaccine production before the fall flu season begins. Our analysis describes the optimal decision strategies for this commit-or-defer decision. Many insights are drawn from this model that could contribute to more informed flu vaccine composition decisions. We comment on the relevance of this commit-or-defer decision model to a firm's production decisions for other seasonal products with an inventory deadline such as fashion goods. © 2008 INFORMS.
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