Mitigating the adverse impact of strategic waiting in dynamic pricing settings: A study of two sales mechanisms

Yossi Aviv, Christopher S. Tang, Rui Yin

Research output: Chapter in Book/Report/Conference proceedingChapter

5 Citations (Scopus)

Abstract

As post-season clearance sales become more prevalent, more customers postpone their purchases and wait for the clearance price. This form of strategic waiting can reduce retailers’ revenue. As a way to mitigate the negative effect of strategic waiting, we analyze two sales mechanisms in this chapter. The first sales mechanism deals with the way inventory information is conveyed to customers. Specifically, we consider two types of inventory display formats under which the retailer can either display all (DA) available units to the customers or display one (DO) unit at a time so that customers have perfect (imperfect) information about the actual inventory level under the DA (DO) display format. The second sales mechanism involves an additional purchasing option that allows each customer to make a “non-withdrawable reservation.” Specifically, if a customer reserves an item during the season and the reserved item remains unsold at the end of the season, then this customer is obligated to purchase the reserved item at the clearance price. In this chapter, we analyze the implications of these two sales mechanisms on the customers’ strategic purchasing behavior, the retailer’s optimal pricing and ordering decisions, and the retailer’s expected profit.

Original languageEnglish (US)
Title of host publicationInternational Series in Operations Research and Management Science
PublisherSpringer New York LLC
Pages353-370
Number of pages18
Volume131
DOIs
StatePublished - 2009

Publication series

NameInternational Series in Operations Research and Management Science
Volume131
ISSN (Print)08848289

Fingerprint

Dynamic Pricing
Sales
Customers
Display devices
Costs
Purchasing
Display
Clearance
Profitability
Unit
Dynamic pricing
Reservation
Imperfect
Pricing
Profit
Retailers

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Strategy and Management
  • Applied Mathematics
  • Computer Science Applications
  • Software

Cite this

Aviv, Y., Tang, C. S., & Yin, R. (2009). Mitigating the adverse impact of strategic waiting in dynamic pricing settings: A study of two sales mechanisms. In International Series in Operations Research and Management Science (Vol. 131, pp. 353-370). (International Series in Operations Research and Management Science; Vol. 131). Springer New York LLC. https://doi.org/10.1007/978-0-387-98026-3_13

Mitigating the adverse impact of strategic waiting in dynamic pricing settings : A study of two sales mechanisms. / Aviv, Yossi; Tang, Christopher S.; Yin, Rui.

International Series in Operations Research and Management Science. Vol. 131 Springer New York LLC, 2009. p. 353-370 (International Series in Operations Research and Management Science; Vol. 131).

Research output: Chapter in Book/Report/Conference proceedingChapter

Aviv, Y, Tang, CS & Yin, R 2009, Mitigating the adverse impact of strategic waiting in dynamic pricing settings: A study of two sales mechanisms. in International Series in Operations Research and Management Science. vol. 131, International Series in Operations Research and Management Science, vol. 131, Springer New York LLC, pp. 353-370. https://doi.org/10.1007/978-0-387-98026-3_13
Aviv Y, Tang CS, Yin R. Mitigating the adverse impact of strategic waiting in dynamic pricing settings: A study of two sales mechanisms. In International Series in Operations Research and Management Science. Vol. 131. Springer New York LLC. 2009. p. 353-370. (International Series in Operations Research and Management Science). https://doi.org/10.1007/978-0-387-98026-3_13
Aviv, Yossi ; Tang, Christopher S. ; Yin, Rui. / Mitigating the adverse impact of strategic waiting in dynamic pricing settings : A study of two sales mechanisms. International Series in Operations Research and Management Science. Vol. 131 Springer New York LLC, 2009. pp. 353-370 (International Series in Operations Research and Management Science).
@inbook{bfd479770059450290053aa36a6ce01e,
title = "Mitigating the adverse impact of strategic waiting in dynamic pricing settings: A study of two sales mechanisms",
abstract = "As post-season clearance sales become more prevalent, more customers postpone their purchases and wait for the clearance price. This form of strategic waiting can reduce retailers’ revenue. As a way to mitigate the negative effect of strategic waiting, we analyze two sales mechanisms in this chapter. The first sales mechanism deals with the way inventory information is conveyed to customers. Specifically, we consider two types of inventory display formats under which the retailer can either display all (DA) available units to the customers or display one (DO) unit at a time so that customers have perfect (imperfect) information about the actual inventory level under the DA (DO) display format. The second sales mechanism involves an additional purchasing option that allows each customer to make a “non-withdrawable reservation.” Specifically, if a customer reserves an item during the season and the reserved item remains unsold at the end of the season, then this customer is obligated to purchase the reserved item at the clearance price. In this chapter, we analyze the implications of these two sales mechanisms on the customers’ strategic purchasing behavior, the retailer’s optimal pricing and ordering decisions, and the retailer’s expected profit.",
author = "Yossi Aviv and Tang, {Christopher S.} and Rui Yin",
year = "2009",
doi = "10.1007/978-0-387-98026-3_13",
language = "English (US)",
volume = "131",
series = "International Series in Operations Research and Management Science",
publisher = "Springer New York LLC",
pages = "353--370",
booktitle = "International Series in Operations Research and Management Science",

}

TY - CHAP

T1 - Mitigating the adverse impact of strategic waiting in dynamic pricing settings

T2 - A study of two sales mechanisms

AU - Aviv, Yossi

AU - Tang, Christopher S.

AU - Yin, Rui

PY - 2009

Y1 - 2009

N2 - As post-season clearance sales become more prevalent, more customers postpone their purchases and wait for the clearance price. This form of strategic waiting can reduce retailers’ revenue. As a way to mitigate the negative effect of strategic waiting, we analyze two sales mechanisms in this chapter. The first sales mechanism deals with the way inventory information is conveyed to customers. Specifically, we consider two types of inventory display formats under which the retailer can either display all (DA) available units to the customers or display one (DO) unit at a time so that customers have perfect (imperfect) information about the actual inventory level under the DA (DO) display format. The second sales mechanism involves an additional purchasing option that allows each customer to make a “non-withdrawable reservation.” Specifically, if a customer reserves an item during the season and the reserved item remains unsold at the end of the season, then this customer is obligated to purchase the reserved item at the clearance price. In this chapter, we analyze the implications of these two sales mechanisms on the customers’ strategic purchasing behavior, the retailer’s optimal pricing and ordering decisions, and the retailer’s expected profit.

AB - As post-season clearance sales become more prevalent, more customers postpone their purchases and wait for the clearance price. This form of strategic waiting can reduce retailers’ revenue. As a way to mitigate the negative effect of strategic waiting, we analyze two sales mechanisms in this chapter. The first sales mechanism deals with the way inventory information is conveyed to customers. Specifically, we consider two types of inventory display formats under which the retailer can either display all (DA) available units to the customers or display one (DO) unit at a time so that customers have perfect (imperfect) information about the actual inventory level under the DA (DO) display format. The second sales mechanism involves an additional purchasing option that allows each customer to make a “non-withdrawable reservation.” Specifically, if a customer reserves an item during the season and the reserved item remains unsold at the end of the season, then this customer is obligated to purchase the reserved item at the clearance price. In this chapter, we analyze the implications of these two sales mechanisms on the customers’ strategic purchasing behavior, the retailer’s optimal pricing and ordering decisions, and the retailer’s expected profit.

UR - http://www.scopus.com/inward/record.url?scp=84874768523&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84874768523&partnerID=8YFLogxK

U2 - 10.1007/978-0-387-98026-3_13

DO - 10.1007/978-0-387-98026-3_13

M3 - Chapter

AN - SCOPUS:84874768523

VL - 131

T3 - International Series in Operations Research and Management Science

SP - 353

EP - 370

BT - International Series in Operations Research and Management Science

PB - Springer New York LLC

ER -