Optimal pricing and production decisions of fashion apparel brands in a two‐stage sales setting

Abstract

Clothing is a typical seasonal and fashionable product; it is very easy to cause inventory backlog problems. This paper addresses the determination of pricing and production of a fashion clothing brand under both presale and regular sales stages. More specifically, we analyze the effect of the fashion degree of clothing and price on the demand. Demand during different market periods (peak sales season, low sales season, and stable market) change with time. The static pricing decision of presale price is made at the presale stage, but the regular sales price under static and dynamic pricing decisions is compared. We build both static and dynamic pricing models, with the objective of finding a pricing and production strategy that maximizes total expected profit of the clothing brand under two-stage sale. The influences of the fashion degree attenuation factor and the initial fashion degree on the brand's optimal pricing and revenue are analyzed. We show that when the market is in the off season or the market size is stable, the brand can benefit from the dynamic pricing policy. When the market is in peak sales season, the static price is better than the dynamic price strategy. No matter how the market size changes, in the regular sales stage, the optimal price of the brand always decreases with the fashion degree attenuation factor, and increases with the fashion degree sensitivity coefficient.

Value‐Added Service for Fashion Product Supply Chain with Overseas Warehouse Logistics Outsourcing

“…Referring to Shi et al (2021) [34], market demand is a function of the product price, VAS level, and fashion rate of the product, i.e., D(p, S, t)…”

“…(1) For a two-echelon fashion product CBEC supply chain dominated by the integrated OWLP, when the demand rate is considered the impact of VAS level in addition to retail price, fashion rate (Shi et al, 2021) [34] with the additive form rather than the multiplicative form (Cai et [35][36][37]. What are the optimal product pricing, the optimal logistics pricing, and the optimal VAS level?…”

Impacts of differentiated services and competition on the pricing strategies of ride‐hailing platforms

“…Some scholars focus on the pricing of traditional enterprises, such as S. W. Lin and Januardi. (2022), Huang et al (2022), andShi et al (2020). However, with the rapid development of platform economy, the pricing decision of ride-hailing platforms has become a hot topic in the field of operation management (J.…”

Pricing strategy for logistics service platforms with competition and user distance preference

“…Choi et al (2020) used the mean risk theory to analyze and explore how the customer's risk attitude affects the optimal service pricing decision, and indicted that the best service price will decrease (increase) if consumers are more risk-averse. Shi et al (2021) investigated the optimal pricing and productions decisions for fashion apparel brands, and showed that a dynamic pricing policy should be adopted when the market size is stable rather a static price strategy. Unlike earlier research, this paper introduces spatial distance preferences of logistics service demanders and providers in the single-homing and competitive bottleneck models, and studies the impact on the pricing strategy of two competing logistics platforms.…”