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• Background Note | HBS Case Collection | 2013 (Revised from original 2012 version)

  Inventory-Based Lending Industry Note

  C. Fritz Foley, Ananth Raman and Nathan C. Craig

  Inventory-based lending is a form of asset-based lending used by retailers and wholesalers. This note describes the development and the current state of the inventory-based lending industry.

  Keywords: Banks and Banking; Financing and Loans; Banking Industry;

  Citation:

  Foley, C. Fritz, Ananth Raman, and Nathan C. Craig. "Inventory-Based Lending Industry Note." Harvard Business School Background Note 612-057, May 2013. (Revised from original January 2012 version.)

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• Working Paper | HBS Working Paper Series | 2013

  Improving Store Liquidation

  Nathan Craig and Ananth Raman

  Store liquidation is the time-constrained divestment of retail outlets through an in-store sale of inventory. The retail industry depends extensively on store liquidation, not only as a means for investors to recover capital from failed ventures, but also to allow managers of going concerns to divest stores in efforts to enhance performance and to change strategy. Recent examples of entire chains being liquidated include Borders Group in 2012, Circuit City in 2009, and Linens 'n Things in 2008; the value of inventory sold during these liquidations alone is $3B. The store liquidation problem is related to but also differs substantially from the markdown optimization problem that has been studied extensively in the literature. This paper introduces the store liquidation problem to the literature and presents a technique for optimizing key decision variables, such as markdown, inventory, and store closing decisions during liquidations. We show that our approach could improve net recovery on cost (i.e., the profit obtained during liquidations stated as a percentage of the cost value of liquidated assets) by 2 to 7 percentage points in the cases we examined. The paper also identifies ways in which current practice in store liquidation differs from the optimal decisions identified in the paper and traces the consequences of these differences.

  Citation:

  Craig, Nathan, and Ananth Raman. "Improving Store Liquidation." Harvard Business School Working Paper, No. 13–096, May 2013.

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• Article | Harvard Business Review | May 2013

  Health Care's Service Fanatics: How the Cleveland Clinic Leaped to the Top of the Patient-satisfaction Surveys

  James Merlino and Ananth Raman

  The Cleveland Clinic has long had a reputation for medical excellence. But in 2009 the CEO acknowledged that patients did not think much of their experience there, and he decided to act. Since then the Clinic has leaped to the top tier of patient-satisfaction surveys, and it now draws hospital executives from around the world who want to study its practices. The Clinic's journey also holds lessons for organizations outside health care that must suddenly compete by creating a superior customer experience. The authors, one of whom was critical to steering the hospital's transformation, detail the processes that allowed the Clinic to excel at patient satisfaction without jeopardizing its traditional strengths.

  Citation:

  Merlino, James, and Ananth Raman. "Health Care's Service Fanatics: How the Cleveland Clinic Leaped to the Top of the Patient-satisfaction Surveys." Harvard Business Review 91, no. 5 (May 2013): 1–10.

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