Bartering: Price-Setting Newsvendor Problem with Barter Exchange

Abstract

Barter exchange is a system of swapping goods or services for other goods or services in a moneyless and direct manner. Barter has become an effective model of a circular economy because it reduces the consumption impact. Bartering maximizes the utility of assets and existing resources, and can unleash the unspent social, economic, and environmental value of underutilized assets. The present article analyzes the price-setting newsvendor problem with a barter exchange option. The retailer facing a stochastic price-dependent demand sells a product on the market and, additionally, needs another product for its own purposes. Therefore, first, the retailer trades the unsold product for the product it needs by means of barter, and next disposes of the unsold product at a discounted price at the end of the selling season. The retailer’s optimal order quantity and optimal price are derived assuming additive uncertainty in demand. This type of demand function has special characteristics, for example, the actual demand may attain negative values in times of economic uncertainty. The possibility of negative demand realizations is taken into consideration in the study. It proves that, in certain cases, the optimal solution belongs to the set of high barter prices which implies that the actual demand may be negative.

Returns handling in e-commerce: How to avoid demand negativity in supply chain contracts with returns?

“…The study shows that the non-negativity limitation is indispensable to avoid suboptimal solutions and to ensure the completeness of the discussion. These statements are in line with the results of Kyparisis and Koulamas [ 22 ], Bieniek [ 6 ], Bieniek [ 5 ] and Bieniek [ 7 ] where other supply chain models were studied. Kyparisis and Koulamas [ 22 ], Bieniek [ 5 ] and Bieniek [ 7 ] consider the newsvendor problem of various kinds and Bieniek [ 6 ] investigates vendor managed consignment inventory contract which is similar to this study.…”

“…The problem of the theoretically negative realized demand in supply chain models is investigated in [ 5 , 6 , 20 , 22 ]. Krishnan [ 20 ] emphasizes that the non-negativity assumption should be taken into account if the demand is in the additive form in order to provide the generality of the study.…”

“…Bieniek [ 6 ] investigates a two-stage vendor managed consignment inventory contract with a similar restriction imposed on demand and demonstrates that the retailer’s expected profit does not have to be concave, but the problem always has at least one optimal solution. The newsvendor problem with barter exchange and the mean-variance newsvendor problem under demand non-negativity are considered in Bieniek [ 5 ] and Bieniek [ 7 ], respectively.…”

Impacts of barter exchange and decision biases in a two‐level supply chain under pull contract

“…The results show that barter exchange benefits the newsvendor by means of managing uncertain demand. Bieniek (2021) extends the work of Hua et al. (2020) by considering the pricing decision of the newsvendor under the assumption of additive uncertainty in demand.…”

Avengers, assemble the literature! A multi‐study review of consumption, environmental values, and planetary health research

“…Studies on natural resource consumption have examined value recreation of wool(Pawson & Perkins, 2013) as well as efficient water management(Sarpong & Amankwaa, 2022) and reuse(Saurí & Arahuetes, 2019), whereas studies that seek to motivate pro-environmental behavior have explored consumer preferences for energy(Ediger et al, 2018) and investigated the role of biospheric values(Nguyen et al, 2016) and rewards versus penalties(Mahmoodi et al, 2021) in shaping proenvironmental behavior. Last but not least, studies have also shed light on barter exchanges(Bieniek, 2021), consumer profile(Arias et al, 2022), and shared consumption(Roos & Hahn, 2017) that transpire in the circular economy, as well as the criteria analysis of green public procurement (Braulio-Gonzalo & Bovea, 2020) and the public sector marketing model(Boenigk & Möhlmann, 2016) that enable consumers to hold public and private stakeholders accountable for their environmental impact.Cluster 12. Pro-environmental behavior motivation (Cluster color: Blue; Total publications: 4 articles; Total citations: 185 citations; Average publication year: 2019.0) Cluster 13.…”