The optimal price discount, order quantity and minimum quantity in newsvendor model with group purchase

Luo, Zhenwei; Wang, Jinting

doi:10.3934/jimo.2015.11.1

Cited by 5 publications

(9 citation statements)

References 14 publications

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“…In addition, several studies consider group buying as a virtual sales channel for suppliers, and compare it with the option of selling only to individuals (e.g. Luo and Wang 2015, Tran and Desiraju 2016, Zhang and Liu 2016. Table 1 shows that most of the extant literature considers the GPO as a virtual sales channel and does not explore the effect of group buying mechanism on the revenues of all parties in the supply chain.…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of a group purchasing organization under demand and price uncertainty

Karabağ

Tan

2017

Flex Serv Manuf J

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Section: Literature Reviewmentioning

confidence: 99%

Analysis of a group purchasing organization under demand and price uncertainty

Karabağ

Tan

2017

Flex Serv Manuf J

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“…Because determining the optimal price discount in the GB strategy is equivalent to determine price, this paper used the price-setting newsvendor model with unknown demand distribution to determine the optimal price discount and order quantity that maximize GB sellers’ profits in a single period. Similar to Luo and Wang (2015), the demand function here is a combination of a known deterministic function of price and an error term, but the error term is stochastic with unknown distribution. Because GB takes more time to gather more customers to form one group, the number of historical transaction data usually much less than that of individual-buying.…”

Section: Relevant Workmentioning

confidence: 99%

“…Unfortunately, the above literature did not discuss the issue of optimal order quantity. Luo and Wang (2015) offered an innovative and theoretical model to analyze the optimal price discount and order quantity. However, it must be aware of the underlying distribution the demand random variable follows when making optimal decisions by their model and thus curb its applicability.…”

Section: Introductionmentioning

confidence: 99%

“…However, it must be aware of the underlying distribution the demand random variable follows when making optimal decisions by their model and thus curb its applicability. This paper is an extension of Luo and Wang (2015). The price-setting newsvendor model taking the characteristics of GB into account was used to determine the optimal price discount and order quantity to maximize GB seller’s profit.…”

Section: Introductionmentioning

confidence: 99%

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Applying the bootstrap method to newsvendor model incorporating group buying for optimal price discount and order quantity

Chen

Chiu

et al. 2017

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Purpose Group buying (GB) is a shopping strategy through which customers obtain volume discounts on the products they purchase, whereas retailers obtain quick turnover. In the scenario of GB, the optimal discount strategy is a key issue because it affects the profit of sellers. Previous research has focused on exploring the price discount and order quantity with a fixed selling price of the product assuming that customer demand is uncertain (but follows a known distribution). This study aims to look at the same problem but goes further to examine the case where not only customer demand is certain but also the demand distribution is unknown. Design/methodology/approach In this study, optimal price discount and order quantity of a GB problem cast as a price-setting newsvendor problem were obtained assuming that the distribution of customer demand is unknown. The price–demand relationship is considered in addition form and product form, respectively. The bootstrap sampling technique is used to develop a solution procedure for the problem. To validate the usefulness of the proposed method, a simulated comparison of the proposed model and the existing one was conducted. The effects of sample size, demand form and parameters of the demand form on the performance of the proposed model are presented and discussed. Findings It is revealed from the numerical results that the proposed model is appropriate to the problem at hand, and it becomes more effective as sample size increases. Because the two forms of demand indicate restrictive assumptions about the effect of price on the variance of demand, it is found that the proposed model seems to be more suitable for addition form of demand. Originality/value This study contributes to the growing literature on GB models by developing a bootstrap-based newsvendor model to determine an optimal discount price and order quantity for a fixed-price GB website. This model can assist the sellers in making decisions on optimal discount price and order quantity without knowing the form of customer demand distribution.

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“…Introduction. In modern consumer products market, enterprises adopt various marketing strategies to enhance their market share and competitiveness, and among them, the price discount may be a popular one [14,31,29]. Generally, the price discount can motivate retailers to make larger orders, which can not only help suppliers to reduce storage and clear stock to relieve their capital pressure, but also decrease their order processing cost [5,6].…”

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confidence: 99%

Optimal ordering policy for inventory mechanism with a stochastic short-term price discount

Wang¹,

Xing²,

Gao³

2020

Journal of Industrial &Amp; Management Optimization

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This paper considers an inventory mechanism in which the supplier may provide a short-term price discount to the retailer at a future time with some uncertainty. To maximize the retailer's profit in this setting, we establish an optimal replenishment and stocking strategy model. Based on the retailer's inventory cost-benefit analysis, we present a closed-form solution for the inventory model and provide an optimal ordering policy to the retailer. Numerical experiments and numerical sensitivity are given to provide some high insights to the inventory model.

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The optimal price discount, order quantity and minimum quantity in newsvendor model with group purchase

Cited by 5 publications

References 14 publications

Analysis of a group purchasing organization under demand and price uncertainty

Analysis of a group purchasing organization under demand and price uncertainty

Applying the bootstrap method to newsvendor model incorporating group buying for optimal price discount and order quantity

Optimal ordering policy for inventory mechanism with a stochastic short-term price discount

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