Volume 56, Number 6, November-December 2022
|Page(s)||3941 - 3953|
|Published online||25 November 2022|
Inventory pooling and pricing decisions in multiple markets with strategic customers
School of Business Administration, Guangdong University of Finance, Guangdong 510521, P.R. China
2 School of Credit Management, Guangdong University of Finance, Guangzhou 510521, P.R. China
3 School of Intelligent Systems Engineering, Sun Yat-sen University, Guangzhou 510275, P.R. China
4 School of Business Administration, Guangxi University, Nanning 530004, P.R. China
Accepted: 18 September 2022
This study considers the pricing and inventory decisions for the retailer selling in multiple markets with strategic customers. The impact of strategic customer behavior on inventory pooling is examined. The equilibrium decisions, in which strategic customers tend to purchase early, are subsequently characterized in the pooled/non-pooled systems. Our results highlight the role of the strategic customer in each market. Compared with myopic customers, the retailer is prone to reduce its inventory for strategic customers. The retailer’s optimal inventory for high-profit products is lower in the pooled system than in the non-pooled system. However, the result is reversed for low-profit products. The analytical and numerical results simultaneously demonstrate that, in the high-profit condition, the retailers’ inventory in the pooled system increases with the correlation coefficient of different markets, while the retailers’ profit decreases with the correlation coefficient. There is an opposite relationship in the low-profit condition. When the markets are less correlated, the retailer owns low inventory but high profit. Moreover, the retailers’ profit is always higher in the pooled system than in the non-pooled system.
Mathematics Subject Classification: 9N90 / 62C12 / 91A15
Key words: Inventory pooling / newsvendor model / rational expectations equilibrium / strategic customers
© The authors. Published by EDP Sciences, ROADEF, SMAI 2022
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Current usage metrics show cumulative count of Article Views (full-text article views including HTML views, PDF and ePub downloads, according to the available data) and Abstracts Views on Vision4Press platform.
Data correspond to usage on the plateform after 2015. The current usage metrics is available 48-96 hours after online publication and is updated daily on week days.
Initial download of the metrics may take a while.