Online retailers' promotional pricing, free-shipping threshold, and inventory decisions: A simulation-based analysis

European Journal of Operational Research

Volumn 230, Issue 2, 2013, Pages 272-283

  Becerril Arreola, Rafael ^a   Leng, Mingming ^b   Parlar, Mahmut ^c  

^a UNIVERSITY OF SOUTH CAROLINA   (United States)

^b LINGNAN UNIVERSITY   (Hong Kong)

^c MCMASTER UNIVERSITY   (Canada)

Author keywords

Profit margin Contingent free shipping Inventory Simulation with Arena Optimization with OptQuest Sensitivity analysis

Indexed keywords

CONVERSION RATES; DECISION PROBLEMS; INVENTORY DECISIONS; ONLINE RETAILING; OPTIMAL DECISIONS; PROFIT MARGIN; SIMULATION-BASED ANALYSIS; STANDARD DEVIATION;

COATED MATERIALS; COSTS; ELECTRONIC COMMERCE; OPTIMIZATION; PROBABILITY DISTRIBUTIONS; PROFITABILITY; SENSITIVITY ANALYSIS; STATISTICS;

SHIPS;

EID: 84878904906     PISSN: 03772217     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.ejor.2013.04.006     Document Type: Article

References (34)

1. Advertising.Com, Holiday Shopping Study: Consumer Shopping Patterns and Advertising Performance, Optigence Research Report, 2007.
2. N.A.H. Agatz, M. Fleischmann, and J.A.E.E. van Nunen E-fulfillment and multi-channel distribution - a review European Journal of Operational Research 187 2 2008 339 356
3. E.T. Anderson, G.J. Fitzsimons, and D. Simester Measuring and mitigating the costs of stockouts Management Science 52 11 2006 1751 1763
4. S.P. Anderson, A. de Palma, and J.F. Thisse Discrete Choice Theory of Product Differentiation 1992 MIT Press Cambridge, MA
5. N. Aras, V. Verter, and T. Boyaci Coordination and priority decisions in hybrid manufacturing/remanufacturing systems Production and Operations Management 15 4 2006 528 543
6. R.G. Askin, and J. Chen Dynamic task assignment for throughput maximization with worksharing European Journal of Operational Research 168 3 2006 853 869
7. A. Ayanso, M. Diaby, and S.K. Nair Inventory rationing via drop-shipping in Internet retailing: a sensitivity analysis European Journal of Operational Research 171 1 2006 135 152
8. R.C. Blattberg, and S.A. Neslin Sales Promotion: Concepts, Methods and Strategies 1990 Prentice Hall Englewood Cliffs, NJ
9. P. Bradford, and M. Katehakis Constrained inventory allocation and its applications WSEAS Transactions on Mathematics 6 2 2007 263 270
10. E. Breugelmans, K. Campo, and E. Gijsbrechts Opportunities for active stock-out management in online stores: the impact of the stock-out policy on online stock-out reactions Journal of Retailing 82 3 2006 215 228
11. G.P. Cachon, and A.G. Kok Category management and coordination in retail assortment planning in the presence of basket shopping consumers Management Science 53 6 2007 934 951
12. E.M. Dinlersoz, and H. Li The shipping strategies of Internet retailers: evidence from internet book retailing Quantitative Marketing and Economics 4 2006 407 438
13. L. Dong, P. Kouvelis, and Z. Tian Dynamic pricing and inventory control of substitute products Manufacturing and Service Operations Management 11 2 2009 317 339
14. M. Ettl, G.E. Feigin, G.Y. Lin, and D.D. Yao A supply network model with base-stock control and service requirements Operations Research 48 2 2000 216 232
15. M. Gümüş, S. Li, W. Oh, S. Ray, Shipping fees or shipping free? A tale of two price partitioning strategies in online retailing, Production and Operations Management, in press.
16. G. Hadley, and T.M. Whitin Analysis of Inventory Systems 1963 Prentice-Hall Englewood Cliffs, NJ
17. G. Hua, S. Wang, and T.C.E. Cheng Price and lead time decisions in dual-channel supply chains European Journal of Operational Research 205 1 2010 113 126
18. G. Hua, S. Wang, and T.C.E. Cheng Optimal order lot sizing and pricing with free shipping European Journal of Operational Research 218 2 2012 435 441
19. G. Hua, S. Wang, and T.C.E. Cheng Optimal pricing and order quantity for the newsvendor problem with free shipping International Journal of Production Economics 135 1 2012 162 169
20. W. Jang, and D. Kim Integrated production and allocation policies with one direct shipping option European Journal of Operational Research 181 2 2007 716 732
21. W. Jang, D. Kim, and K. Park Inventory allocation and shipping when demand temporarily exceeds production capacity European Journal of Operational Research 227 3 2013 464 470
22. X. Jing, and M. Lewis Stockouts in online retailing Journal of Marketing Research XLVIII 2011 342 354
23. W.D. Kelton, R.P. Sadowski, and D.T. Sturrock Simulation with Arena fourth ed. 2007 McGraw-Hill New York
24. M. Leng, and R. Becerril-Arreola Joint pricing and contingent free-shipping decisions in B2C transactions Production and Operations Management 19 4 2010 390 405
25. M. Leng, and M. Parlar Free shipping and purchasing decisions in B2B transactions: a game-theoretic analysis IIE Transactions 37 2005 1119 1128
26. M. Lewis The effect of shipping fees on customer acquisition, customer retention, and purchase quantities Journal of Retailing 82 1 2006 13 23
27. M. Lewis, V. Singh, and S. Fay An empirical study of the impact of nonlinear shipping and handling fees on purchase incidence and expenditure decisions Marketing Science 25 1 2006 51 64
28. S. Ross Stochastic Processes 1983 John Wiley New York
29. H.E. Thompson Inventory management and capital budgeting: a pedagogical note Decision Sciences 6 2 1975 383 398
30. M.C. van der Heijden Multi-echelon inventory control in divergent systems with shipping frequencies European Journal of Operational Research 116 2 1999 331 351
31. D. Yao, Christmas Creeps into Stores, 2006. < http://www. signonsandiego.com/uniontrib/20061025/news-1n25creep.html > (last accessed 29.03.13).
32. Y. Zhao, and M. Katehakis On the structure of optimal ordering policies for stochastic inventory systems with minimum order quantity Probability in the Engineering and Informational Sciences 20 2 2006 257 270
33. B. Zhou, M. Katehakis, and Y. Zhao Managing stochastic inventory systems with free shipping option European Journal of Operational Research 196 1 2009 186 197
34. B. Zhou, Y. Zhao, and M. Katehakis Effective control policies for stochastic inventory systems with a minimum order quantity and linear costs International Journal of Production Economics 106 2 2007 523 531