The benefits of advance booking discount programs: Model and analysis

• 成果类型: Article
• 署名作者: Tang, CS; Rajaram, K; Alptekinoglu, A; Ou, JH
• 署名单位: University of California System; University of California Los Angeles; National University of Singapore
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1030.0188
• 发表日期: 2004
• 页码: 465-478
• 关键词: Retailing; marketing/manufacturing interfaces; pricing

摘要

Consider a retailer who sells perishable seasonal products with uncertain demand. Due to the short sales season and long replenishment lead times associated with such products, the retailer is unable to update demand forecasts by using actual sales data generated from the early part of the season and to respond by replenishing stocks during the season. To overcome this limitation, we examine the case in which the retailer develops a program called the advance booking discount (ABD) program that entices customers to commit to their orders at a discount price prior to the selling season. The time between placement and fulfillment of these precommitted orders provides an opportunity for the retailer to update demand forecasts by utilizing information generated from the precommitted orders and to respond by placing a cost-effective order at the beginning of the selling season. In this paper, we evaluate the benefits of the ABD program and characterize the optimal discount price that maximizes the retailer's expected profit.