IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v11y2023i6p1555-d1104535.html
   My bibliography  Save this article

An Inventory Model with Advertisement- and Customer-Relationship-Management-Sensitive Demand for a Product’s Life Cycle

Author

Listed:
  • Mei-Chuan Cheng

    (Department of Information Management, Fu Jen Catholic University, Xinzhuang Dist., New Taipei City 242062, Taiwan)

  • Chun-Tao Chang

    (Department of Statistics, Tamkang University, Tamsui Dist., New Taipei City 251301, Taiwan)

  • Tsu-Pang Hsieh

    (Department of Business Administration, Aletheia University, Tamsui Dist., New Taipei City 25103, Taiwan)

Abstract

Advertisements play an important role in communicating with target customers. A higher advertisement frequency increases costs but may increase the chances of acquiring new customers. Moreover, faced with a wide-ranging array of products that might fit specific needs, customers usually buy according to expectations about value and satisfaction. When customers are satisfied with a purchasing experience, they are more likely to buy again and share their experiences with others. Hence, companies are concerned about increasing customer value and service satisfaction to develop and manage customer relationships. This maintains a company’s competitive edge and can improve its market share. In this article, we incorporate the frequency of advertisements and the cost of customer relationship management (CRM) into the demand function under a product life cycle (PLC). Customers can return products in the appreciation period offered by a retailer. A profit-maximizing model is developed to analyze the joint marketing and ordering policy of each stage of a product’s life cycle with a product return guarantee. We construct an algorithm to identify the optimal decisions. Finally, numerical examples are presented to illustrate the proposed model, and managerial insights are obtained from a sensitivity analysis, followed by conclusions and future research.

Suggested Citation

  • Mei-Chuan Cheng & Chun-Tao Chang & Tsu-Pang Hsieh, 2023. "An Inventory Model with Advertisement- and Customer-Relationship-Management-Sensitive Demand for a Product’s Life Cycle," Mathematics, MDPI, vol. 11(6), pages 1-16, March.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:6:p:1555-:d:1104535
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/11/6/1555/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/11/6/1555/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Al-Amin Khan, Md. & Shaikh, Ali Akbar & Konstantaras, Ioannis & Bhunia, Asoke Kumar & Cárdenas-Barrón, Leopoldo Eduardo, 2020. "Inventory models for perishable items with advanced payment, linearly time-dependent holding cost and demand dependent on advertisement and selling price," International Journal of Production Economics, Elsevier, vol. 230(C).
    2. Mei-Chuan Cheng & Tsu-Pang Hsieh & Hsiu-Mei Lee & Liang-Yuh Ouyang, 2020. "Optimal ordering policies for deteriorating items with a return period and price-dependent demand under two-phase advance sales," Operational Research, Springer, vol. 20(2), pages 585-604, June.
    3. Bibhas C. Giri & Anamika Dash, 2022. "Optimal batch shipment policy for an imperfect production system under price-, advertisement- and green-sensitive demand," Journal of Management Analytics, Taylor & Francis Journals, vol. 9(1), pages 86-119, January.
    4. Yalabik, Baris & Petruzzi, Nicholas C. & Chhajed, Dilip, 2005. "An integrated product returns model with logistics and marketing coordination," European Journal of Operational Research, Elsevier, vol. 161(1), pages 162-182, February.
    5. Wu, Jiang & Chang, Chun-Tao & Teng, Jinn-Tsair & Lai, Kuei-Kuei, 2017. "Optimal order quantity and selling price over a product life cycle with deterioration rate linked to expiration date," International Journal of Production Economics, Elsevier, vol. 193(C), pages 343-351.
    6. K. Skouri & I. Konstantaras, 2009. "Order Level Inventory Models for Deteriorating Seasonable/Fashionable Products with Time Dependent Demand and Shortages," Mathematical Problems in Engineering, Hindawi, vol. 2009, pages 1-24, October.
    7. Chen, Jing & Bell, Peter C., 2012. "Implementing market segmentation using full-refund and no-refund customer returns policies in a dual-channel supply chain structure," International Journal of Production Economics, Elsevier, vol. 136(1), pages 56-66.
    8. Hu, Wei & Li, Yongjian & Govindan, Kannan, 2014. "The impact of consumer returns policies on consignment contracts with inventory control," European Journal of Operational Research, Elsevier, vol. 233(2), pages 398-407.
    9. Li, Dan & Chen, Jing & Liao, Yi, 2021. "Optimal decisions on prices, order quantities, and returns policies in a supply chain with two-period selling," European Journal of Operational Research, Elsevier, vol. 290(3), pages 1063-1082.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wenqiang Li & Juan He & Yangyan Shi, 2024. "Contracting Supply Chains Considering Retailers’ Marketing Efforts," Mathematics, MDPI, vol. 12(11), pages 1-24, May.
    2. Yuli Sartono & Endang Siti Astuti & Wilopo Wilopo & Teuku Noerman, 2024. "Enhancing Sustainability in Solution Projects through Social CRM: An Expansion of the Self-Efficacy Value Adoption Model," Sustainability, MDPI, vol. 16(19), pages 1-21, September.

    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. Ajoy Hatibaruah & Sumit Saha, 2023. "An inventory model for two-parameter Weibull distributed ameliorating and deteriorating items with stock and advertisement frequency dependent demand under trade credit and preservation technology," OPSEARCH, Springer;Operational Research Society of India, vol. 60(2), pages 951-1002, June.
    2. Jin, Delong & Caliskan-Demirag, Ozgun & Chen, Frank (Youhua) & Huang, Min, 2020. "Omnichannel retailers’ return policy strategies in the presence of competition," International Journal of Production Economics, Elsevier, vol. 225(C).
    3. Shi, Xiutian & Dong, Ciwei & Cheng, T.C.E., 2018. "Does the buy-online-and-pick-up-in-store strategy with pre-orders benefit a retailer with the consideration of returns?," International Journal of Production Economics, Elsevier, vol. 206(C), pages 134-145.
    4. Lin, Jiaxin & Zhang, Juliang & Cheng, T.C.E., 2020. "Optimal pricing and return policy and the value of freight insurance for a retailer facing heterogeneous consumers with uncertain product values," International Journal of Production Economics, Elsevier, vol. 229(C).
    5. Duong, Quang Huy & Zhou, Li & Meng, Meng & Nguyen, Truong Van & Ieromonachou, Petros & Nguyen, Duy Tiep, 2022. "Understanding product returns: A systematic literature review using machine learning and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 243(C).
    6. Biswajit Sarkar & Bikash Koli Dey & Mitali Sarkar & Ali AlArjani, 2021. "A Sustainable Online-to-Offline (O2O) Retailing Strategy for a Supply Chain Management under Controllable Lead Time and Variable Demand," Sustainability, MDPI, vol. 13(4), pages 1-26, February.
    7. Li, Wei & Chen, Jing & Chen, Bintong, 2018. "Supply chain coordination with customer returns and retailer's store brand product," International Journal of Production Economics, Elsevier, vol. 203(C), pages 69-82.
    8. Sarkar, Biswajit & Dey, Bikash Koli, 2023. "Is online-to-offline customer care support essential for consumer service?," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    9. Li, Guo & Li, Lin & Sethi, Suresh P. & Guan, Xu, 2019. "Return strategy and pricing in a dual-channel supply chain," International Journal of Production Economics, Elsevier, vol. 215(C), pages 153-164.
    10. Radhi, Mohannad & Zhang, Guoqing, 2019. "Optimal cross-channel return policy in dual-channel retailing systems," International Journal of Production Economics, Elsevier, vol. 210(C), pages 184-198.
    11. Zhang, Qiao & Chen, Jing & Chen, Bintong, 2021. "Information strategy in a supply chain under asymmetric customer returns information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    12. Ata Allah Taleizadeh & Mahsa Noori-daryan & Kannan Govindan, 2016. "Pricing and ordering decisions of two competing supply chains with different composite policies: a Stackelberg game-theoretic approach," International Journal of Production Research, Taylor & Francis Journals, vol. 54(9), pages 2807-2836, May.
    13. Li, Bo & Jiang, Yushan, 2019. "Impacts of returns policy under supplier encroachment with risk-averse retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 47(C), pages 104-115.
    14. Mei-Chuan Cheng & Tsu-Pang Hsieh & Hsiu-Mei Lee & Liang-Yuh Ouyang, 2020. "Optimal ordering policies for deteriorating items with a return period and price-dependent demand under two-phase advance sales," Operational Research, Springer, vol. 20(2), pages 585-604, June.
    15. Biman Kanti Nath & Nabendu Sen, 2022. "A Partially Backlogged Inventory Model for Time-Deteriorating Items Using Penalty Cost and Time-Dependent Holding Cost," SN Operations Research Forum, Springer, vol. 3(4), pages 1-14, December.
    16. Kar, Sumi & Basu, Kajla & Sarkar, Biswajit, 2023. "Advertisement policy for dual-channel within emissions-controlled flexible production system," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).
    17. Rahman, Shams & Subramanian, Nachiappan, 2012. "Factors for implementing end-of-life computer recycling operations in reverse supply chains," International Journal of Production Economics, Elsevier, vol. 140(1), pages 239-248.
    18. Wang, Kai & Ding, Peiqi & Zhao, Ruiqing, 2021. "Strategic credit sales to express retail under asymmetric default risk and stochastic market demand," Omega, Elsevier, vol. 101(C).
    19. Khouja, Moutaz & Hammami, Ramzi, 2023. "Optimizing price, order quantity, and return policy in the presence of consumer opportunistic behavior for online retailers," European Journal of Operational Research, Elsevier, vol. 309(2), pages 683-703.
    20. Bikash Koli Dey & Hyesung Seok, 2024. "Intelligent inventory management with autonomation and service strategy," Journal of Intelligent Manufacturing, Springer, vol. 35(1), pages 307-330, January.

    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:gam:jmathe:v:11:y:2023:i:6:p:1555-:d:1104535. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.