CSpace  > 系统科学研究所
Managing demand uncertainty: Probabilistic selling versus inventory substitution
Zhang, Yi1; Hu, Guowei1; Wang, Shouyang2; Zhang, Juliang1; Fernandez, Vicenc3
2018-02-01
Source PublicationINTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS
ISSN0925-5273
Volume196Pages:56-67
AbstractDemand variability is prevailing in the current rapidly changing business environment, which makes it difficult for a retailer that sells multiple substitutable products to determine the optimal inventory. To combat demand uncertainty, both strategies of inventory substitution and probabilistic selling can be used. Although the two strategies differ in operation, we believe that they share a common feature in combating demand uncertainty by encouraging some customers to give up some specific demand for the product to enable demand substitution. It is interesting to explore which strategy is more advantageous to the retailer. We endogenize the inventory decision and demonstrate the efficiency of probabilistic selling through demand substitution. Then we analyze some special cases without cannibalization, and computationally evaluate the profitability and inventory decisions of the two strategies in a more general case to generate managerial insights. The results show that the retailer should adjust inventory decisions depending on products' substitution possibility. The interesting computational result is that probabilistic selling is more profitable with relatively lower product similarity and higher price-sensitive customers, while inventory substitution outperforms probabilistic selling with higher product similarity. Higher demand uncertainty will increase the profitability advantage of probabilistic selling over inventory substitution.
KeywordOR in marketing Probabilistic selling Opaque selling Inventory substitution Demand uncertainty
DOI10.1016/j.ijpe.2017.10.001
Language英语
Funding ProjectNSFC[71390334] ; NSFC[71532002] ; Beijing Philosophy and Social Science Foundation[13JGB042] ; Fundamental Research Funds for the Central Universities[2015jbwy011]
WOS Research AreaEngineering ; Operations Research & Management Science
WOS SubjectEngineering, Industrial ; Engineering, Manufacturing ; Operations Research & Management Science
WOS IDWOS:000423635600005
PublisherELSEVIER SCIENCE BV
Citation statistics
Document Type期刊论文
Identifierhttp://ir.amss.ac.cn/handle/2S8OKBNM/29477
Collection系统科学研究所
Affiliation1.Beijing Jiaotong Univ, Beijing 100044, Peoples R China
2.Chinese Acad Sci, Acad Math & Syst Sci, Beijing 100190, Peoples R China
3.Univ Politecn Cataluna, Dept Management, Terrassa 08222, Spain
Recommended Citation
GB/T 7714
Zhang, Yi,Hu, Guowei,Wang, Shouyang,et al. Managing demand uncertainty: Probabilistic selling versus inventory substitution[J]. INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS,2018,196:56-67.
APA Zhang, Yi,Hu, Guowei,Wang, Shouyang,Zhang, Juliang,&Fernandez, Vicenc.(2018).Managing demand uncertainty: Probabilistic selling versus inventory substitution.INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS,196,56-67.
MLA Zhang, Yi,et al."Managing demand uncertainty: Probabilistic selling versus inventory substitution".INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS 196(2018):56-67.
Files in This Item:
There are no files associated with this item.
Related Services
Recommend this item
Bookmark
Usage statistics
Export to Endnote
Google Scholar
Similar articles in Google Scholar
[Zhang, Yi]'s Articles
[Hu, Guowei]'s Articles
[Wang, Shouyang]'s Articles
Baidu academic
Similar articles in Baidu academic
[Zhang, Yi]'s Articles
[Hu, Guowei]'s Articles
[Wang, Shouyang]'s Articles
Bing Scholar
Similar articles in Bing Scholar
[Zhang, Yi]'s Articles
[Hu, Guowei]'s Articles
[Wang, Shouyang]'s Articles
Terms of Use
No data!
Social Bookmark/Share
All comments (0)
No comment.
 

Items in the repository are protected by copyright, with all rights reserved, unless otherwise indicated.