Paper Info
Title
Optimal Pricing And Ordering Decisions With Reference Effect And Quick Replenishment Policy
Abstract
This paper considers a revenue management problem in which a retailer determines joint pricing and ordering decisions for a single product over a two-period selling horizon. The goal is to investigate the single and combined influences of reference effect (RE) and quick replenishment (QR) policy on the customers' purchasing behaviors, the retailer's optimal decisions, and the total profit of two periods. We first propose a discrete-time joint pricing and ordering model with RE and QR policy in the presence of strategic customers. Then we extend to the other two models, in which the retailer does not implement the QR policy and the retailer ignores the customers' RE, to, respectively, explore the values of RE and QR policy to the retailer. Several significant results and managerial insights are derived through theoretical analysis and numerical experiments. Implementing the QR policy could help the retailer cut nearly half of the initial order quantity and improve the profit significantly, especially when the strength of RE is large and the storage cost is high. With the QR policy, if the retailer ignores the RE that factually exists in the customers' minds, she would set lower prices, place fewer initial order quantity, and lose much profit, especially when she sells luxury products or the customers' purchasing behaviors are strongly affected by RE.
Year
DOI
Venue
2022
10.1111/itor.12960
INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH
Keywords
DocType
Volume
pricing, ordering, reference effect, quick replenishment policy, strategic customer
Journal
29
Issue
ISSN
Citations 
2
0969-6016
0
PageRank 
References 
Authors
0.34
0
3
Name
Order
Citations
PageRank
Nenggui Zhao100.68
Qiang Wang200.34
Jie Wu340936.02