IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v232y2021ics092552732030339x.html
   My bibliography  Save this article

Managing an expiring product under a market that is heterogeneous in the sensitivity to the retailer's reputation

Author

Listed:
  • Herbon, Avi

Abstract

Reputation plays an important role in assuring product quality in markets where consumers can only imperfectly judge the quality before consumption. For the retailer, reputation is a valuable asset, as consumers are more likely to trust a company that has a sound reputation. The existing literature on inventory management rarely considers demand as being affected by reputation. In this study, we develop an operational research approach in which the demand rate is affected by the price, remaining shelf-life, and retailer's reputation, as well as by the heterogeneity of consumers in terms of their sensitivity to the latter two factors. We represent the retailer's reputation by the overall average freshness level of the products sold on his shelf (obtained from records), while the retailer's objective is to maximize his profit.

Suggested Citation

  • Herbon, Avi, 2021. "Managing an expiring product under a market that is heterogeneous in the sensitivity to the retailer's reputation," International Journal of Production Economics, Elsevier, vol. 232(C).
    • Handle: RePEc:eee:proeco:v:232:y:2021:i:c:s092552732030339x
    DOI: 10.1016/j.ijpe.2020.107990
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S092552732030339X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2020.107990?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kathryn Graddy, 2006. "Markets: The Fulton Fish Market," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 207-220, Spring.
    2. Eugene Khmelnitsky & Gonen Singer, 2015. "An optimal inventory management problem with reputation-dependent demand," Annals of Operations Research, Springer, vol. 231(1), pages 305-316, August.
    3. Janssen, Larissa & Claus, Thorsten & Sauer, Jürgen, 2016. "Literature review of deteriorating inventory models by key topics from 2012 to 2015," International Journal of Production Economics, Elsevier, vol. 182(C), pages 86-112.
    4. Avinadav, Tal & Herbon, Avi & Spiegel, Uriel, 2013. "Optimal inventory policy for a perishable item with demand function sensitive to price and time," International Journal of Production Economics, Elsevier, vol. 144(2), pages 497-506.
    5. Yossi Aviv & Amit Pazgal, 2008. "Optimal Pricing of Seasonal Products in the Presence of Forward-Looking Consumers," Manufacturing & Service Operations Management, INFORMS, vol. 10(3), pages 339-359, December.
    6. Eugene Khmelnitsky & Gonen Singer, 2015. "Erratum to: An optimal inventory management problem with reputation-dependent demand," Annals of Operations Research, Springer, vol. 231(1), pages 317-318, August.
    7. Luis A. San-José & Joaquín Sicilia & Manuel González-De-la-Rosa & Jaime Febles-Acosta, 2020. "Best pricing and optimal policy for an inventory system under time-and-price-dependent demand and backordering," Annals of Operations Research, Springer, vol. 286(1), pages 351-369, March.
    8. Kwamena K. Quagrainie & Jill J. McCluskey & Maria L. Loureiro, 2003. "A Latent Structure Approach to Measuring Reputation," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 966-977, April.
    9. Wee, Hui-Ming, 1995. "Joint pricing and replenishment policy for deteriorating inventory with declining market," International Journal of Production Economics, Elsevier, vol. 40(2-3), pages 163-171, August.
    10. Park Timothy & Lohr Luanne, 2006. "Choices of Marketing Outlets by Organic Producers: Accounting for Selectivity Effects," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 4(1), pages 1-26, July.
    11. Avi Herbon, 2016. "Optimal piecewise-constant price under heterogeneous sensitivity to product freshness," International Journal of Production Research, Taylor & Francis Journals, vol. 54(2), pages 365-385, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yan, Xiaoming & Chao, Xiuli & Lu, Ye, 2024. "Optimal control policies for dynamic inventory systems with service level dependent demand," European Journal of Operational Research, Elsevier, vol. 314(3), pages 935-949.
    2. San-José, Luis A. & Sicilia, Joaquín & Cárdenas-Barrón, Leopoldo Eduardo & González-de-la-Rosa, Manuel, 2024. "A sustainable inventory model for deteriorating items with power demand and full backlogging under a carbon emission tax," International Journal of Production Economics, Elsevier, vol. 268(C).
    3. Miao, Jie & Liu, Aijun & Wang, Ruiyao & Lu, Hui, 2022. "The influence of information asymmetry on the strategic inventory of deteriorating commodity," Omega, Elsevier, vol. 107(C).
    4. Sah, Nilesh B. & Banerjee, Anandi & Malm, James & Rahman, Anisur, 2022. "A good name is better than riches: Family firms and working capital management," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).
    5. Nilesh B. Sah & Anandi Banerjee & James Malm & Anisur Rahman, 2021. "A Good Name Is Better Than Riches: Family Firms and Working Capital Management," Discussion Paper Series 2021-02, McColl School of Business, Queens University of Charlotte.
    6. Magfura Pervin & Sankar Kumar Roy & Gerhard-Wilhelm Weber, 2018. "Analysis of inventory control model with shortage under time-dependent demand and time-varying holding cost including stochastic deterioration," Annals of Operations Research, Springer, vol. 260(1), pages 437-460, January.
    7. Avi Herbon & Matan Shnaiderman & Tatyana Chernonog, 2018. "Postponed two-pricing and ordering opportunity for selling a single season inventoried product," Annals of Operations Research, Springer, vol. 271(2), pages 619-640, December.
    8. Tiwari, Sunil & Jaggi, Chandra K. & Gupta, Mamta & Cárdenas-Barrón, Leopoldo Eduardo, 2018. "Optimal pricing and lot-sizing policy for supply chain system with deteriorating items under limited storage capacity," International Journal of Production Economics, Elsevier, vol. 200(C), pages 278-290.
    9. Xu, Man & Tang, Wansheng & Zhao, Ruiqing, 2023. "Should reputable e-retailers undertake service activities along with sales?," Journal of Retailing and Consumer Services, Elsevier, vol. 74(C).
    10. Janvier D. Nkurunziza, 2005. "Reputation and Credit without Collateral in Africa`s Formal Banking," Economics Series Working Papers WPS/2005-02, University of Oxford, Department of Economics.
    11. Vincent Mak & Amnon Rapoport & Eyran J. Gisches & Jiaojie Han, 2014. "Purchasing Scarce Products Under Dynamic Pricing: An Experimental Investigation," Manufacturing & Service Operations Management, INFORMS, vol. 16(3), pages 425-438, July.
    12. Qingyuan Zhu & Chenghao Yu & Zhiyang SHEN & Malin Song, 2023. "Competition between a manufacturer and a relicensing third party when customers are strategic," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2021-2040, June.
    13. Namin, Aidin & Soysal, Gonca P. & Ratchford, Brian T., 2022. "Alleviating demand uncertainty for seasonal goods: An analysis of attribute-based markdown policy for fashion retailers," Journal of Business Research, Elsevier, vol. 145(C), pages 671-681.
    14. Yiwei Chen & Nikolaos Trichakis, 2021. "Technical Note—On Revenue Management with Strategic Customers Choosing When and What to Buy," Operations Research, INFORMS, vol. 69(1), pages 175-187, January.
    15. Qi Chen & Qi Xu & Wenjie Wang, 2019. "Optimal Policies for the Pricing and Replenishment of Fashion Apparel considering the Effect of Fashion Level," Complexity, Hindawi, vol. 2019, pages 1-12, February.
    16. Adam J. Mersereau & Dan Zhang, 2012. "Markdown Pricing with Unknown Fraction of Strategic Customers," Manufacturing & Service Operations Management, INFORMS, vol. 14(3), pages 355-370, July.
    17. Lingxiu Dong & Panos Kouvelis & Zhongjun Tian, 2009. "Dynamic Pricing and Inventory Control of Substitute Products," Manufacturing & Service Operations Management, INFORMS, vol. 11(2), pages 317-339, December.
    18. Janssen, Larissa & Diabat, Ali & Sauer, Jürgen & Herrmann, Frank, 2018. "A stochastic micro-periodic age-based inventory replenishment policy for perishable goods," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 445-465.
    19. Gonca P. Soysal & Lakshman Krishnamurthi, 2012. "Demand Dynamics in the Seasonal Goods Industry: An Empirical Analysis," Marketing Science, INFORMS, vol. 31(2), pages 293-316, March.
    20. Hao, Zhaowei & Qi, Wei & Gong, Tianxiao & Chen, Lihua & Shen, Zuo-Jun Max, 2019. "Innovation uncertainty, new product press timing and strategic consumers," Omega, Elsevier, vol. 89(C), pages 122-135.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:232:y:2021:i:c:s092552732030339x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.