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Advance selling under deposit expansion and consumer’s valuation change
- Source :
- Operational Research. 22:3633-3661
- Publication Year :
- 2021
- Publisher :
- Springer Science and Business Media LLC, 2021.
-
Abstract
- Motivated by the emerging practices of China's major e-commerce platforms, we investigate the effect of consumer’s valuation change, deposit expansion and return policy on retailer’s advance booking decisions. We establish the retailer’s expected profit based on a two-stage newsvendor model and derive his optimal deposit and order quantity decisions under different scenarios. Our conclusions show that: (1) the retailer gains further profit under the advance selling strategy with a deposit, due to the reduction of inventory risk and exploitation of consumer’s valuation uncertainty; (2) the retailer benefits more from advance selling when he has a lower profit margin or the consumers have low-level prior valuations; (3) the effectiveness of advance selling on exploiting consumer’s valuation uncertainty will be weakened if the retailer allows customers to return products; (4) a lower deposit expansion rate leads to higher deposit and expected profit.
- Subjects :
- Numerical Analysis
Profit (accounting)
Expansion rate
Strategy and Management
Management Science and Operations Research
Newsvendor model
Microeconomics
Expected profit
Computational Theory and Mathematics
Order (business)
Management of Technology and Innovation
Modeling and Simulation
Profit margin
Business
Statistics, Probability and Uncertainty
Valuation (finance)
Subjects
Details
- ISSN :
- 18661505 and 11092858
- Volume :
- 22
- Database :
- OpenAIRE
- Journal :
- Operational Research
- Accession number :
- edsair.doi...........8ed7298432d3c9cc5bd75bb764a0b77a