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Pricing, replenishment, and timing of selling in a market with heterogeneous customers

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  • Anily, Shoshana
  • Hassin, Refael

Abstract

We consider a deterministic pricing and replenishment model in which the retailer advertises a fixed price and the selling schedule, and customers can advance or delay their time of purchase incurring holding or shortage costs. We investigate the impact of heterogeneity in the customers' reservation prices. We show that the resulting optimal solution may be very different from that obtained when customers are homogeneous. We identify nine types of possible optimal sales strategies, and compute their profits. In particular, the solution may contain sales at several discrete points of time between consecutive replenishment epochs with no sales between them.

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  • Anily, Shoshana & Hassin, Refael, 2013. "Pricing, replenishment, and timing of selling in a market with heterogeneous customers," International Journal of Production Economics, Elsevier, vol. 145(2), pages 672-682.
    • Handle: RePEc:eee:proeco:v:145:y:2013:i:2:p:672-682
    DOI: 10.1016/j.ijpe.2013.05.021
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    2. Mou, Shandong & Robb, David J. & DeHoratius, Nicole, 2018. "Retail store operations: Literature review and research directions," European Journal of Operational Research, Elsevier, vol. 265(2), pages 399-422.
    3. Hattori, Keisuke & Zennyo, Yusuke, 2018. "Heterogeneous Consumer Expectations and Monopoly Pricing for Durables with Network Externalities," MPRA Paper 89893, University Library of Munich, Germany, revised 08 Nov 2018.
    4. Jinrong Liu & Qi Xu, 2020. "Joint Decision on Pricing and Ordering for Omnichannel BOPS Retailers: Considering Online Returns," Sustainability, MDPI, vol. 12(4), pages 1-18, February.
    5. Amihai Glazer & Refael Hassin & Irit Nowik, 2019. "How Advance Sales can Reduce Profits: When to Buy, When to Sell, and What Price to Charge," Papers 1912.02869, arXiv.org, revised Apr 2023.
    6. Yang, Daojian & Qi, Ershi & Li, Yajiao, 2015. "Quick response and supply chain structure with strategic consumers," Omega, Elsevier, vol. 52(C), pages 1-14.
    7. Song, Yanan & Zhao, Xiaobo, 2016. "Strategic customer behavior facing possible stockout: An experimental study," International Journal of Production Economics, Elsevier, vol. 180(C), pages 57-67.
    8. Guo, Xiaolong & Bian, Junsong & Wu, Peiyan & Shi, Victor & Chen, Huangen, 2023. "Probabilistic product design with regret-anticipated consumers," International Journal of Production Economics, Elsevier, vol. 263(C).

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