Optimal order quantity in the presence of strategic customers

Mishra, Narayan Chandra; Venkataraman, Sri Vanamalla

doi:10.1007/s10479-020-03731-4

Cited by 4 publications

(3 citation statements)

References 27 publications

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“…Strategic consumer behavior refers to the intertemporal shifting of consumer purchase decisions. That is, consumers strategically choose the best time to buy to maximize their utility [58], which can be followed by situations such as delayed purchases [40,17,1,26] and reference price dependence [21,16,46,59,10]. Simultaneously, ShopSavvy, Shopbrain, and other shopping price comparison software 9 , so that bounded consumer rationality reflected more prominent.…”

mentioning

confidence: 99%

“…Su (2009) [40] developed a model of inertial consumer decision making, where consumer inertia influences consumers' choice to buy immediately or to delay their purchase and found that consumer inertia has both positive and negative effects on profits: it reduces demand in the first stage Still, it increases competition among consumers in the second stage. Mishra and Venkataraman (2020) [26] considered a monopoly retailer of a seasonal product, faced with random demand from strategic customers who have delayed purchases and determined the optimal order quantity to maximize the retailer's expected profits in a monopoly market.…”

mentioning

confidence: 99%

“…In summary, this paper utilizes model building, analytical proof, and numerical simulation based on the theories related to new retail, pre-sale, and bounded consumer rationality. This type of research methodology has been applied in many literature [19,26,27,39]. We study the impact of consumer experience and bounded consumer rationality on retailers' operating strategies in the combination of new retail and pre-sale.…”

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confidence: 99%

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Pre-sale ordering strategy based on the new retail context considering bounded consumer rationality

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<p style='text-indent:20px;'>The purpose of this paper is to study the impact of bounded consumer rationality on the order quantity and profitability of the seller in the advance period and the spot period in the context of the combination of new retail and pre-sale. In this paper, we develop a seller order model in the context of the combination of new retail and pre-sale, with and without reference price dependence. Besides, the model considers the order cancellation and delayed purchase behavior of consumers. We then discuss the optimal profit and optimal order quantity under different conditions and the effect of different reference price dependence and value-added offline service on them. Our research shows that: First, the seller tends to set the deposit too low in pre-sales. Second, reference price dependence has different effects on order quantities in different periods. The seller should pay more attention to the impact of reference price dependence. Third, on the whole, consumer rationality benefits the seller. The seller, or the public policymaker, can benefit new retail businesses by increasing consumer rationality. Last, in the new retail context, an increase in offline service value-added, even if it increases total order quantity, is not always beneficial to the seller and may reduce profits. Therefore, the seller should weigh all factors to determine the optimal value-added offline services.</p>

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