IDEAS home Printed from https://ideas.repec.org/a/eee/jouret/v84y2008i2p165-179.html
   My bibliography  Save this article

Store inventory can affect demand: Empirical evidence from magazine retailing

Author

Listed:
  • Koschat, Martin A.

Abstract

In retailing, inventory analysis and inventory practice have traditionally been based on the assumption that underlying demand does not vary with inventory levels. A growing body of research supports the contention that the validity of this assumption has significant implications for optimal inventory policies. The concern for such inventory effects motivated a major US magazine publisher to conduct the market study documented in this article. It presents empirical evidence that demand can indeed vary with inventory, and it quantifies the magnitude of these inventory effects which are twofold. An inventory decrease for one brand can, first, result in a decrease of demand for the brand and, second, in an increase of demand for a competing brand. These observations support the expansion of the traditional Newsvendor model to include inventory effects as well as the practice to make inventory decisions for retail categories rather than individual brands.

Suggested Citation

  • Koschat, Martin A., 2008. "Store inventory can affect demand: Empirical evidence from magazine retailing," Journal of Retailing, Elsevier, vol. 84(2), pages 165-179.
    • Handle: RePEc:eee:jouret:v:84:y:2008:i:2:p:165-179
    DOI: 10.1016/j.jretai.2008.04.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022435908000146
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretai.2008.04.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Ravi Anupindi & Maqbool Dada & Sachin Gupta, 1998. "Estimation of Consumer Demand with Stock-Out Based Substitution: An Application to Vending Machine Products," Marketing Science, INFORMS, vol. 17(4), pages 406-423.
    2. Birendra K. Mishra & Srinivasan Raghunathan, 2004. "Retailer- vs. Vendor-Managed Inventory and Brand Competition," Management Science, INFORMS, vol. 50(4), pages 445-457, April.
    3. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, May.
    4. repec:dau:papers:123456789/1757 is not listed on IDEAS
    5. Alain Bultez & Philippe Naert, 1988. "SH.A.R.P.: Shelf Allocation for Retailers' Profit," Marketing Science, INFORMS, vol. 7(3), pages 211-231.
    6. Serguei Netessine & Nils Rudi, 2003. "Centralized and Competitive Inventory Models with Demand Substitution," Operations Research, INFORMS, vol. 51(2), pages 329-335, April.
    7. Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
    8. Pierre Desmet & Valérie Renaudin, 1998. "Estimation of Product Category Sales Responsiveness to Allocated Shelf Space," Post-Print halshs-00143451, HAL.
    9. Martin Koschat & William Putsis, 2000. "Who Wants You When You're Old and Poor? Exploring the Economics of Media Pricing," Journal of Media Economics, Taylor & Francis Journals, vol. 13(4), pages 215-232.
    10. Martin A. Koschat & Glorian L. Berk & Jeffrey A. Blatt & Nancy M. Kunz & Michael H. LePore & Sam Blyakher, 2003. "Newsvendors Tackle the Newsvendor Problem," Interfaces, INFORMS, vol. 33(3), pages 72-84, June.
    11. Koschat, Martin A., 2005. "A Case for Simple Tables," The American Statistician, American Statistical Association, vol. 59, pages 31-40, February.
    12. Marcel Corstjens & Peter Doyle, 1981. "A Model for Optimizing Retail Space Allocations," Management Science, INFORMS, vol. 27(7), pages 822-833, July.
    13. Abel P. Jeuland & Steven M. Shugan, 1983. "Managing Channel Profits," Marketing Science, INFORMS, vol. 2(3), pages 239-272.
    14. William R. Dillon & Sunil Gupta, 1996. "A Segment-Level Model of Category Volume and Brand Choice," Marketing Science, INFORMS, vol. 15(1), pages 38-59.
    15. Siddharth Mahajan & Garrett van Ryzin, 2001. "Stocking Retail Assortments Under Dynamic Consumer Substitution," Operations Research, INFORMS, vol. 49(3), pages 334-351, June.
    16. Koschat, Martin A & Srinagesh, Padmanabhan & Uhler, Linda J, 1995. "Efficient Price and Capacity Choices under Uncertain Demand: An Empirical Analysis," Journal of Regulatory Economics, Springer, vol. 7(1), pages 5-26, January.
    17. James D. Dana, Jr. & Nicholas C. Petruzzi, 2001. "Note: The Newsvendor Model with Endogenous Demand," Management Science, INFORMS, vol. 47(11), pages 1488-1497, November.
    18. Urban, Timothy L., 2005. "Inventory models with inventory-level-dependent demand: A comprehensive review and unifying theory," European Journal of Operational Research, Elsevier, vol. 162(3), pages 792-804, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Devangan, Lokendra & Amit, R.K. & Mehta, Peeyush & Swami, Sanjeev & Shanker, Kripa, 2013. "Individually rational buyback contracts with inventory level dependent demand," International Journal of Production Economics, Elsevier, vol. 142(2), pages 381-387.
    2. A. Gürhan Kök & Marshall L. Fisher, 2007. "Demand Estimation and Assortment Optimization Under Substitution: Methodology and Application," Operations Research, INFORMS, vol. 55(6), pages 1001-1021, December.
    3. Stavrulaki, Euthemia, 2011. "Inventory decisions for substitutable products with stock-dependent demand," International Journal of Production Economics, Elsevier, vol. 129(1), pages 65-78, January.
    4. Narendra Agrawal & Stephen A. Smith, 2003. "Optimal retail assortments for substitutable items purchased in sets," Naval Research Logistics (NRL), John Wiley & Sons, vol. 50(7), pages 793-822, October.
    5. Chiang, Wei-yu Kevin, 2010. "Product availability in competitive and cooperative dual-channel distribution with stock-out based substitution," European Journal of Operational Research, Elsevier, vol. 200(1), pages 111-126, January.
    6. Hübner, Alexander H. & Kuhn, Heinrich, 2012. "Retail category management: State-of-the-art review of quantitative research and software applications in assortment and shelf space management," Omega, Elsevier, vol. 40(2), pages 199-209, April.
    7. Vishal Gaur & Young-Hoon Park, 2007. "Asymmetric Consumer Learning and Inventory Competition," Management Science, INFORMS, vol. 53(2), pages 227-240, February.
    8. Bianchi-Aguiar, Teresa & Hübner, Alexander & Carravilla, Maria Antónia & Oliveira, José Fernando, 2021. "Retail shelf space planning problems: A comprehensive review and classification framework," European Journal of Operational Research, Elsevier, vol. 289(1), pages 1-16.
    9. Pol Boada-Collado & Victor Martínez-de-Albéniz, 2020. "Estimating and Optimizing the Impact of Inventory on Consumer Choices in a Fashion Retail Setting," Manufacturing & Service Operations Management, INFORMS, vol. 22(3), pages 582-597, May.
    10. Murray, Chase C. & Talukdar, Debabrata & Gosavi, Abhijit, 2010. "Joint Optimization of Product Price, Display Orientation and Shelf-Space Allocation in Retail Category Management," Journal of Retailing, Elsevier, vol. 86(2), pages 125-136.
    11. Xiaoning Luo & Yanmin Jiang & Qiying Hu, 2010. "Supply chain coordination with shelf‐space and retail price dependent demand and heterogeneous retailers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 57(8), pages 673-685, December.
    12. Yalçın Akçay & Yunke Li & Harihara Prasad Natarajan, 2020. "Category Inventory Planning With Service Level Requirements and Dynamic Substitutions," Production and Operations Management, Production and Operations Management Society, vol. 29(11), pages 2553-2578, November.
    13. Anantaram Balakrishnan & Michael S. Pangburn & Euthemia Stavrulaki, 2004. ""Stack Them High, Let 'em Fly": Lot-Sizing Policies When Inventories Stimulate Demand," Management Science, INFORMS, vol. 50(5), pages 630-644, May.
    14. Mehmet Fadılog̃lu & Oya Karaşan & Mustafa Pınar, 2010. "A model and case study for efficient shelf usage and assortment analysis," Annals of Operations Research, Springer, vol. 180(1), pages 105-124, November.
    15. Urban, Timothy L., 2005. "A periodic-review model with serially-correlated, inventory-level-dependent demand," International Journal of Production Economics, Elsevier, vol. 95(3), pages 287-295, March.
    16. Youhua (Frank) Chen & Ye Lu & Minghui Xu, 2012. "Optimal inventory control policy for periodic‐review inventory systems with inventory‐level‐dependent demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(6), pages 430-440, September.
    17. Rabinovich, Elliot & Chenarides, Lauren & Richards, Timothy J., 2024. "Inventory Competition and the Cost of a Stockout," 2024 Annual Meeting, July 28-30, New Orleans, LA 343649, Agricultural and Applied Economics Association.
    18. Amr Farahat & Joonkyum Lee, 2018. "The Multiproduct Newsvendor Problem with Customer Choice," Operations Research, INFORMS, vol. 66(1), pages 123-136, January.
    19. Tan, Baris & Karabati, Selcuk, 2013. "Retail inventory management with stock-out based dynamic demand substitution," International Journal of Production Economics, Elsevier, vol. 145(1), pages 78-87.
    20. Victor Martínez-de-Albéniz & Sumit Kunnumkal, 2022. "A Model for Integrated Inventory and Assortment Planning," Management Science, INFORMS, vol. 68(7), pages 5049-5067, July.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jouret:v:84:y:2008:i:2:p:165-179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.