Optimal pricing and ordering decisions with reference effect and quick replenishment policy

Zhao, Nenggui; Wang, Qiang; Wu, Jie

doi:10.1111/itor.12960

Cited by 14 publications

(9 citation statements)

References 55 publications

(77 reference statements)

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“…(2017), and Zhao et al. (2022). In addition to the reference price, quality is also viewed as a meaningful reference point by scholars.…”

Section: Literature Reviewmentioning

confidence: 97%

“…Consumers can form a reference value based on their past purchasing experience. Research on the reference price effect has attracted wide attention, and the related literature can refer to Popescu and Wu (2007), Chen et al (2016), Yang et al (2017), andZhao et al (2022). In addition to the reference price, quality is also viewed as a meaningful reference point by scholars.…”

Section: Literature Reviewmentioning

confidence: 99%

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Dynamic pricing and investment for fashion products under reference effect

Shi

You

2023

Int Trans Operational Res

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In this study, we discuss on the dynamic pricing and investment strategy for fashion products which decay in value, such as fashion clothes. The products are sold by an enterprise under a monopoly market in a finite horizon. Due to the obsolescence of fashion products, their fashion level decreases over time. Obviously, the selling price has a negative effect on demand, while the fashion level has a positive effect. Moreover, we introduce a reference value, which is used to indicate consumers' requirements for fashion level. We assume that investment on products performance or goodwill can reduce consumers' requirements for fashion level, an optimal control model is established. To maximize the enterprise's total profit, we obtain the trajectories of the optimal pricing and investment strategy by utilizing the Pontryagin's maximum principle. The optimal strategy is to gradually lower the selling price and then slightly raise it at the end of the sales period and reduce investment as products become obsolete. Afterwards, we provide a numerical example to illustrate our conclusions. Through the sensitivity analysis of the main parameters, we capture the influence of the parameters on an optimal decision. Moreover, some management implications are given.

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“…(2017), and Zhao et al. (2022). In addition to the reference price, quality is also viewed as a meaningful reference point by scholars.…”

Section: Literature Reviewmentioning

confidence: 97%

Section: Literature Reviewmentioning

confidence: 99%

Dynamic pricing and investment for fashion products under reference effect

Shi

You

2023

Int Trans Operational Res

View full text Add to dashboard Cite

show abstract

“…They develop some conditions to ensure that the dynamic pricing policy is optimal when customers are strategic. Under the two-period price and stock model, Zhao et al [16] analyze the impacts of reference price effect and the quick response policy. They argue that the quick response policy can help the seller reduce the initial stock as well as improve the profit when the customer is strategic.…”

Section: Literature Reviewmentioning

confidence: 99%

Supply Chain Performance with a Downside-Risk-Averse Retailer and Strategic Customers

et al. 2023

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Predicting future promotion information on markdowns, customers can maximize their utilities by deciding when to buy. With this strategic behavior, this paper investigates a downside-risk-averse retailer’s integrated stock and pricing problem using a single case study method. Analyzing effects of the downside risk aversion and strategic customers is our purpose. By exploring a two-phase newsvendor model with a retailer selling to strategic customers, our work determines the downside-risk-averse retailer’s equilibrium ordering level and selling price. On this basis, effects of the downside risk aversion and the strategic behavior on the retailer’s optimum decisions and profit are analyzed. We find that the reverse effect of the strategic behavior can be mitigated by the retailer’s downside risk constraint. We also extend the model to a decentralized supply chain case. It is found that a low (high) downside risk aversion would mean that the supply chain profit in the decentralized case can (cannot) dominate the centralized under some (any) wholesale price contracts when customers are strategic. In addition, for different risk aversions, we also construct contracts to optimize the supply chain profit. Our results will provide reference evidence of making operational management decisions for the downside-risk-averse retailer in the case of strategic customers.

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“…Simultaneously considering these two elements are more in line with the actual situation, and it has been widely studied in the existing literature (e.g., [2] and [37]).…”

Section: Introductionmentioning

confidence: 99%

Price decisions with asymmetric reference effect and information sharing in dual-channel supply chains

Zhao

Wang

2022

RAIRO-Oper. Res.

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This paper considers a retailer-manufacturer dual-channel supply chain (DCSC) consisting of a retail channel and a direct sale channel. Previous literature has shown that either asymmetric reference effect (ARE) or information sharing (IS) significantly impacts customers' demand, then the channel members' pricing decisions. As yet, no literature has examined the joint effect of both on the channel members' pricing decisions, especially in a DCSC. To fill up the deficiency, we first explore and compare the pricing decisions in a centralized and a decentralized DCSC with ARE, respectively, with and without IS, using the Stackelberg game and two-stage optimization technique. Then we evaluate the values of ARE and IS by introducing model misspecification and numerical experiments. We find that substantial revenue will be lost if the retailer ignores ARE when information is shared than not shared, especially when the channel members are pessimistic about the market. A higher reference price or a weaker ARE induces the channel members to increase prices, and make IS more valuable to them. Besides, whether the information is shared or not, channel members generally underestimate revenues under a relatively high reference price, while overestimating the revenues under a relatively small reference price. Furthermore, the manufacturer conditionally accepts the IS while the retailer always accepts it.

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Optimal pricing and ordering decisions with reference effect and quick replenishment policy

Cited by 14 publications

References 55 publications

Dynamic pricing and investment for fashion products under reference effect

Dynamic pricing and investment for fashion products under reference effect

Supply Chain Performance with a Downside-Risk-Averse Retailer and Strategic Customers

Price decisions with asymmetric reference effect and information sharing in dual-channel supply chains

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