IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Assessing the Value of Information Sharing in a Promotional Retail Environment

  • Ananth. V. Iyer

    ()

    (Krannert School of Management, 1310 Krannert Building, Purdue University, West Lafayette, Indiana 47907)

  • Jianming Ye

    ()

    (Department of Statistics and CIS, Baruch College, City University of New York, 17 Lexington Avenue, New York, New York 10010)

Registered author(s):

    We focus on a logistics system where inventory is held at three levels: the customers, the retail store, and the warehouse. Retail customer segments are heterogeneous and differ in their reservation prices for product as well as their holding costs. They purchase product from a retail store managed by a retailer. The retailer chooses a retail pricing scheme to maximize his expected profit given a model of customer temporal response to retail pricing. This retailer is supplied product from a warehouse managed by a manufacturer. The manufacturer is responsible for maintaining inventory level at the warehouse and providing 100% service level for retailer orders. The manufacturer uses all available information to generate an inventory policy that maximizes expected profit subject to the service-level requirement. We evaluate the manufacturer's optimal expected profit under two possible schemes: (1) no information regarding the timing of retail promotion plans, and (2) full information regarding the timing of retail promotion plans. We show: (1) as the predictability of the sales impact of a promotion decreases, it may be optimal for the retailer to eliminate retail promotions; (2) increased stockpiling tendency of customers increases retailer profits and decreases manufacturer profits; and (3) retail-promotion information sharing can make retail promotions change from being less profitable than no promotions to being more profitable than no promotions for the manufacturer. We show the impact of fitting the model to a grocery store data set that provided data regarding retail sales (and associated prices) of canned tomato soup over two years. We also explore managerial insights suggested by the model.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://dx.doi.org/10.1287/msom.2.2.128.12350
    Download Restriction: no

    Article provided by INFORMS in its journal Manufacturing & Service Operations Management.

    Volume (Year): 2 (2000)
    Issue (Month): 2 (February)
    Pages: 128-143

    as
    in new window

    Handle: RePEc:inm:ormsom:v:2:y:2000:i:2:p:128-143
    Contact details of provider: Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page: http://www.informs.org/
    Email:


    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:inm:ormsom:v:2:y:2000:i:2:p:128-143. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.