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Article
Publication date: 14 August 2017

Wangmei Tang and Sheng Ang

The paper aims to study a strategy of advance selling with part payment (ADP) in which pre-ordering consumers are required to pay a portion of advance price first and then pay the…

Abstract

Purpose

The paper aims to study a strategy of advance selling with part payment (ADP) in which pre-ordering consumers are required to pay a portion of advance price first and then pay the rest in the spot period to complete the order. The authors compare the ADP strategy with strategies of advance selling with full payment (ADF) and no advance selling (NA) from the perspective of sellers.

Design/methodology/approach

The paper proposes a two-period pricing model with price-off promotion in the first period for a market consisting of consumers and a single seller. For each strategy (i.e. NA, ADF and ADP), solutions to the seller’s optimal order quantity in the spot period, optimal advance price and prepayment in the advance period are derived by backward conduction. Numerical study is also used to obtain straightforward insights.

Findings

Advance price of ADF is lower than that of ADP. Order quantity of ADF is higher than that of ADP. ADP brings more profit than the other two selling strategies, i.e. NA and ADF, when ADP’s implementing conditions are satisfied. While ADF is effective only when unit cost is low, ADP is applicable irrespective of whether the cost is low.

Originality/value

Existing researchers on advance selling mainly focus on the ADF strategy. The paper pays attention to different payment mechanisms in advance selling and steps further to propose a new form of advance selling, i.e. the ADP strategy. The effects of ADP on consumer’s purchasing behavior and seller’s marketing decisions are analyzed.

Details

Journal of Modelling in Management, vol. 12 no. 3
Type: Research Article
ISSN: 1746-5664

Keywords

Article
Publication date: 17 October 2022

Haicheng Jia, Jing Li, Ling Liang, Weicai Peng, Jiqing Xie and Jiaping Xie

The development of low-carbon production is impeded by the investment costs of green technology research and development (R&D) and carbon emission reduction while facing the…

273

Abstract

Purpose

The development of low-carbon production is impeded by the investment costs of green technology research and development (R&D) and carbon emission reduction while facing the uncertain risk of emission reduction investment. With the government's carbon emission constraints, green manufacturers implement the advance selling strategy to increase both profit and reduction level. However, few studies consider the consumer's green preference and emission constraints in advance selling market and spot market independently. The authors' paper investigates the optimal strategies of advance selling pricing and reduction effort for green manufacturers to maximize profits.

Design/methodology/approach

The authors' paper designs a stochastic model and investigates the manufacturer's optimal strategies of advance selling price and emission reduction efforts by categorizing different purchasing periods of low-carbon consumers. With the challenges of uncertain demand and government's emission constraints, the authors' develop the non-linear optimization model to investigate the manufacturer's profit-oriented decisions.

Findings

The results show the government's carbon constraints cannot influence the manufacturer's profit, but the consumer's low-carbon preference in the advance selling period can. Interestingly, the manufacturer will make fewer reduction efforts even when the consumers have stronger environmental awareness. In addition, the increasing consumer price sensitivity will exacerbate the profit loss from mandatory emissions reduction. Overall, for achieving a win–win situation between emission reduction and profit growth, green manufacturers should not only consider the sales strategies, market demand, and government constraints in a low-carbon market, but also pay attention to the uncertainty of green technology innovation.

Originality/value

With the consideration of the government's carbon emission constraints, uncertain demand, and low-carbon consumer's preferences, the authors' study innovatively incorporates the joint impacts of advance selling strategy and emission reduction effort strategy and then differentiates between two cases that pertain to the diverse carbon emission regulations.

Details

Industrial Management & Data Systems, vol. 122 no. 12
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 17 June 2022

Ting Chen, Feng Yang, Feifei Shan and Fengmei Xu

Opaque selling has become popular among service providers in recent years. Although many researchers have investigated the optimality of opaque selling for service providers…

Abstract

Purpose

Opaque selling has become popular among service providers in recent years. Although many researchers have investigated the optimality of opaque selling for service providers focusing on heterogeneous consumers, one question remaining unexplored is how the service providers’ optimal decisions are impacted by competitive intensity in a heterogeneous market. This paper aims to determine the conditions under which opaque selling is optimal for competing service providers.

Design/methodology/approach

The paper takes a Hotelling model to characterize the competition between two service providers. The authors also consider the interaction between the service providers and intermediary. Service providers act as game leaders and determine whether they should cooperate with the intermediary to introduce the opaque service.

Findings

The authors find that two competing service providers do not always benefit from opaque selling in a heterogeneous market consisting of leisure and business consumers, and the competitive intensity plays a significant role in the service providers’ decision optimization. Opaque selling allows service providers to acquire more profit in a highly competitive market or when the market contains a large proportion of leisure consumers. Otherwise, it is optimal for service providers without introducing the opaque selling.

Practical implications

The paper examines the optimality of opaque selling for competing service providers, and provides the suggestions to optimize the service providers’ decisions.

Originality/value

The paper investigates how the service providers’ optimal decisions are impacted by competitive intensity, considering the interaction between the service providers and intermediary.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 35 no. 4
Type: Research Article
ISSN: 1355-5855

Keywords

Article
Publication date: 4 May 2021

Yugang Yu, Xin Zhang, Xiong Zhang and Wei T. Yue

New information technologies such as IoT and big data analytics have reshaped the development of smart green products. These products exhibit two important features that are not…

Abstract

Purpose

New information technologies such as IoT and big data analytics have reshaped the development of smart green products. These products exhibit two important features that are not seen in traditional products: environmental friendliness and data network effect. Based on these unique features, the authors investigate a firm's optimal selling strategy of smart green products from both the profitability and environmental perspectives.

Design/methodology/approach

The authors establish stylized models to consider the optimality of three selling strategies: (1) traditional strategy – only offering traditional products, (2) green strategy – only offering smart green products, and (3) hybrid strategy – offering both traditional and smart green products.

Findings

The authors’ analysis shows that in the absence of data network effect, there will always be a conflict between profit maximization and environmental protection. However, a strategy that benefits both the firm and the environment exists when data network effect is present. Interestingly, hybrid and traditional strategies can be win-win strategies, but the green strategy cannot. Also surprisingly, the green strategy may harm the environment more as smart products become greener.

Originality/value

This study examines the economic and environmental implications of selling smart green products, and contributes to existing literature on sustainable operations and green product design by incorporating the impact of both consumer environmental awareness and data network effect. The authors’ findings shed light on how to coordinate the profitability and environmental impact of selling smart green products in the era of big data and IoT.

Details

Information Technology & People, vol. 35 no. 3
Type: Research Article
ISSN: 0959-3845

Keywords

Article
Publication date: 5 March 2024

Zhongfeng Sun, Guojun Ji and Kim Hua Tan

This paper aims to study the joint decision making of advance selling and service cancelation for service provides with limited capacity when consumers are overconfident.

Abstract

Purpose

This paper aims to study the joint decision making of advance selling and service cancelation for service provides with limited capacity when consumers are overconfident.

Design/methodology/approach

For the case in which consumers encounter uncertainties about product valuation and consumption states in the advance period and are overconfident about the probability of a good state, we study how the service provider chooses the optimal sales strategy among the non-advance selling strategy, the advance selling and disallowing cancelation strategy, and the advance selling and allowing cancelation strategy. We also discuss how overconfidence influences the service provider’s decision making.

Findings

The results show that when service capacity is sufficient, the service provider should adopt advance selling and disallow cancelation; when service capacity is insufficient, the service provider should still implement advance selling but allow cancelation; and when service capacity is extremely insufficient, the service provider should offer spot sales. Moreover, overconfidence weakens the necessity to allow cancelation under sufficient service capacity and enhances it under insufficient service capacity but is always advantageous to advance selling.

Practical implications

The obtained results provide managerial insights for service providers to make advance selling decisions.

Originality/value

This paper is among the first to explore the effect of consumers’ overconfidence on the joint decision of advance selling and service cancelation under capacity constraints.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 3 May 2016

Xuemei Li, Xiaoyan Xu and Yanhong Sun

– The purpose of this paper is to study the advance selling strategies for oligopolists when considering the product diffusion effect.

Abstract

Purpose

The purpose of this paper is to study the advance selling strategies for oligopolists when considering the product diffusion effect.

Design/methodology/approach

The authors consider a market that composes of two competitive sellers who are different in their reputation. The two firms sell the same product in the market over two periods (i.e. the advance selling season and the regular selling season). Due to the effect of product diffusion, the demand of each firm in the regular selling season is dependent on the two firms’ advance demands.

Findings

For the firm with lower reputation, it is beneficial to decrease the advance selling price with the diffusion effect caused by its advance demand. For the firm with higher reputation, it is also beneficial to decrease the advance selling price with the diffusion effect caused by its advance demand if the consumers’ enthusiasm for the product in regular selling season is high enough; otherwise it should not decrease his advance selling price since this practice cannot greatly increase his demand.

Practical implications

The obtained results can provide operational managers in reality with valuable suggestions in making advance selling decisions.

Originality/value

The paper is among the first to investigate the impact of product diffusion effect on a firm’s advance selling strategy in a competitive setting.

Details

Kybernetes, vol. 45 no. 5
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 30 November 2023

Wenbo Li, Bin Dan, Xumei Zhang, Yi Liu and Ronghua Sui

With the rapid development of the sharing economy in manufacturing industries, manufacturers and the equipment suppliers frequently share capacity through the third-party…

Abstract

Purpose

With the rapid development of the sharing economy in manufacturing industries, manufacturers and the equipment suppliers frequently share capacity through the third-party platform. This paper aims to study influences of manufacturers sharing capacity on the supplier and to analyze whether the supplier shares capacity as well as its influences.

Design/methodology/approach

This paper deals with conditions that the supplier and manufacturers share capacity through the third-party platform, and the third-party platform competes with the supplier in equipment sales. Considering the heterogeneity of the manufacturer's earning of unit capacity usage and the production efficiency of manufacturer's usage strategies, this paper constructs capacity sharing game models. Then, model equilibrium results under different sharing scenarios are compared.

Findings

The results show that when the production or maintenance cost is high, manufacturers sharing capacity simultaneously benefits the supplier, the third-party platform and manufacturers with high earnings of unit capacity usage. When both the rental efficiency and the production cost are low, or both the rental efficiency and the production cost are high, the supplier simultaneously sells equipment and shares capacity. The supplier only sells equipment in other cases. When both the rental efficiency and the production cost are low, the supplier’s sharing capacity realizes the win-win-win situation for the supplier, the third-party platform and manufacturers with moderate earnings of unit capacity usage.

Originality/value

This paper innovatively examines supplier's selling and sharing decisions considering manufacturers sharing capacity. It extends the research on capacity sharing and is important to supplier's operational decisions.

Details

Industrial Management & Data Systems, vol. 124 no. 2
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 4 December 2017

Shujun Zhou, Bingzhen Sun, Weimin Ma and Xiangtang Chen

The purpose of this paper is to present a new method and model for determining the optimal decision-making for the pricing strategy to the Fuji apple in Shaanxi of Chain which is…

Abstract

Purpose

The purpose of this paper is to present a new method and model for determining the optimal decision-making for the pricing strategy to the Fuji apple in Shaanxi of Chain which is representing fresh agricultural products under the e-commerce environment.

Design/methodology/approach

Considering the rapid development of information technology as well as internet that actually motivate the e-commerce, Fuji apple is a distinctive product in China’s Shaanxi; its sales channels have extended to online sales under the wave of e-commerce. Internet trading platforms make it possible to trade online in real time between suppliers and customers who live in different geographical areas. In this paper, the authors study how to price online to maximize the total revenue. The challenge is to optimally price two different qualities of apple. Based on the consumer surplus theory, the authors use the method that builds the function of the relationship between the proportion of consumers purchasing different qualities of products and price.

Findings

This paper presents a generalized model to determine the optimal pricing that maximizes the total revenue of a fruit grower over a finite planning horizon. The authors divided discount into two intervals and discussed the optimal discounting and pricing at both intervals. Then they determined the optimal pricing strategy for Fuji apple in Shaanxi of Chain under the e-commerce environment.

Originality/value

This paper makes up for the lack of existing studies of pricing under the e-commerce environment. A new method and approach to the traditional pricing strategy is established and applied to a management decision-making problem with Chinese characteristics in reality.

Details

Kybernetes, vol. 47 no. 1
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 10 May 2013

Shuang Xu and Ran Zhang

The purpose of this paper is to investigate how to determine optimal investing stopping time in a stochastic environment, such as with stochastic returns, stochastic interest rate…

Abstract

Purpose

The purpose of this paper is to investigate how to determine optimal investing stopping time in a stochastic environment, such as with stochastic returns, stochastic interest rate and stochastic expected growth rate.

Design/methodology/approach

Transformation method was used for solving optimal stopping problem by providing a way to transform path‐dependent problem into a path‐independent one. Based on option pricing theory, optimal investing stopping time was thought of as an optimal executed timing problem of American‐style option.

Findings

First, the authors transform a path‐dependent stop timing problem to a path‐independent one with transformation under very general conditions, to directly use the existing conclusion of optimal stopping time literature. Second, when dynamics of capital growth is homogeneous, the authors changed the two dimensional optimal stop timing problem into a single dimension problem based on the assumption of zero exercise costs. Third, the authors investigated the comparative dynamics about asset selling boundary on asset value, state variable and return predictability. With constant discount rate and growth rate, the optimal selling timing depends on the simple comparison between capital cost and growth rate.

Originality/value

The paper's contributions to analysis method may be as follows. The authors demonstrate how to transform a path‐dependent stopping problem into a path‐independent one under general conditions. The transform method in this article can be applied to other path‐dependent optimal stopping problems. In particular, a Riccati ordinary differential equation for the transformation is set up. In most examples commonly met in finance, the equation can be solved explicitly.

Details

China Finance Review International, vol. 3 no. 2
Type: Research Article
ISSN: 2044-1398

Keywords

Book part
Publication date: 4 December 2012

Stephen L. Liedtka and Nandkumar Nayar

The current and widespread view in option trading is that early exercise of call options is suboptimal unless there are large dividend payments on the underlying stock (e.g.…

Abstract

The current and widespread view in option trading is that early exercise of call options is suboptimal unless there are large dividend payments on the underlying stock (e.g., Finucane, 1997; Hull, J. C. (2008). Options, futures and other derivatives (7th ed.). Upper Saddle River, NJ: Prentice Hall; Poteshman & Serbin (2003)). Our study substantially refines this view by demonstrating that U.S. tax rules governing capital gain holding periods can create incentives for early exercise under certain conditions. Hence, this study adds to the factors that investors likely consider when making option exercise decisions. We further note that recent research documents early exercises in the absence of large dividends, and refers to these option exercises as “clearly irrational.” Predictions of early exercise from our tax-based model are consistent with the observed patterns of early exercise, suggesting that the criteria for denoting an option exercise as “irrational” should be refined to incorporate capital gain holding periods.

Details

Advances in Taxation
Type: Book
ISBN: 978-1-78052-593-8

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