Postponed two-pricing and ordering opportunity for selling a single season inventoried product

Collection Location Koleksi E-book & E-Journal Perpustakaan Pusat Unila
Edition vol.271issue 2
Call Number
ISBN/ISSN 15729338
Author(s) Herbon, Avi
Shnaiderman, Matan
Chernonog, Tatyana
Subject(s) Business and Management
Classification NONE
Series Title
GMD E-Journal
Language English
Publisher Springer
Publishing Year 2018
Publishing Place Switzerland
Collation
Abstract/Notes Abstract Postponement strategies are becoming increasingly important in light of a global trend in which products’ life-cycles are decreasing, such that even products that are not traditionally considered seasonal become “obsolete” within a short period of time (e.g., electronic devices, new cars). Our work addresses postponed-pricing and ordering decisions for a retailer who sells a newsvendor-type inventoried product, in a selling season that is dividedintotwosub-periods.Thedivisionofthesellingseasonenablestheretailertoon-line adjust her decisions when faced with a scenario (one that is highly prevalent in reality) in which potential demand changes (increases or decreases) following consumers’ experiences of the product in early stages of the selling season. We assume that the retailer has two opportunities for receiving shipments: prior to the first sub-period and prior to the second one.Theretailerdetermineseachorderquantity(base-stocklevel)onthebasisofthedemand distribution for the corresponding sub-period. In each sub-period, after observing additional market signals, the retailer determines the price of the product for that sub-period. With the aid of a stochastic programming approach, we develop optimization problems and solution methodsinordertoobtainpricingandorderingdecisionsthatmaximizetheexpectedprofitof theretailer.Wepresentanextensivenumericalexamplethatcomparesthesuggestedstrategy to three alternative strategies, and conclude that price postponement and responsiveness to demand changes can each reduce leftovers and lost sales as well as substantially increase expected profit. Keywords Revenue management·Newsvendor problem·Price postponement·Stochastic programming·Two-opportunity ordering and pricing problem
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