By Daniela Wiehenbrauk
Promotions are even as liked and feared by means of either nutrition outlets and branded items brands in today’s retail surroundings. loved simply because they allure clever clients and generate an instantaneous influence on a brand’s sale. Feared simply because there's uncertainty in regards to the opponents’ habit and the particular client call for resulting in excessive forecast mistakes. For the shop, this leads to a doom loop of over- or understocking with excessive stock expenses within the offer chain.
Collaboration among shops and the producer disentangles the doom loop. The thesis unearths the right type and timing of knowledge and develops a so known as pageant Index. stock within the provide chain is eradicated and the buyer is served higher at a cheaper price. in accordance with a joint stock and pricing version and an empirical research, it exhibits that the provision chain potency earnings from collaborative promotions bring about a win for purchasers, outlets and the producer.
Read or Download Collaborative Promotions: Optimizing Retail Supply Chains with Upstream Information Sharing (Lecture Notes in Economics and Mathematical Systems 643) PDF
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Extra resources for Collaborative Promotions: Optimizing Retail Supply Chains with Upstream Information Sharing (Lecture Notes in Economics and Mathematical Systems 643)
We combine the demand and supply side of the retailer decision making or, more generally, we combine marketing and production decision making. The problem is how to obtain optimal inventory ordering and promotion decisions jointly, in order to maximize the total profit in the face of competition. These problems arise in many business environments, where marketing and production management is critical in business decision making. It is necessary to evaluate the trade-off between the benefits from higher sales in promotions and additional inventory costs.
Lee et al. (1997) identified four key operational factors encouraging the bullwhip effect. 2 Type and source of shared information Source of information Upstream Downstream Type of information Inventory level Jain and Moinzadeh (2005), Cachon and Fisher (2000), Croson and Donohue (2005) Kulp et al. (2004), Croson and Donohue (2005) Sales data Gavirneni et al. (1999), Lee et al. (2000), Iyer and Ye (2000) Sales forecast Aviv (2001) Lead time Chen and Yu (2005), Steckel et al. (2004) Aviv (2001), Terwiesch et al.
Whoever offers the lowest price in the market serves the smart customer segments. We shall apply a game theoretical approach and use a mixed strategy 16 2 Promotions and Collaboration in Retailing Market Loyal customers Smart customers Loyal customers Purchase decision Retailer A Price and inventory setting Retailer B Information exchange Manufacturer Legend: Players Decision Fig. 6 Research overview equilibrium framework to analyze the price competition between two symmetric retailers, where each retailer determines promotion frequency and promotion depth independently.