Article ID: | iaor20032623 |
Country: | Netherlands |
Volume: | 81/82 |
Start Page Number: | 153 |
End Page Number: | 162 |
Publication Date: | Jan 2003 |
Journal: | International Journal of Production Economics |
Authors: | Arcelus F.J., Srinivasan G., Shah Nita H. |
Keywords: | deteriorating items, pricing |
It is the purpose of this paper to model the retailer's profit-maximizing retail promotion strategy, when confronted with a vendor's trade promotion offer of credit and/or price discount on the purchase of regular or perishable merchandise. At issue is the determination of the three main elements of the retailer's promotion strategy, namely (i) the size of the special order to be placed from the vendor, under the different types of possible trade incentives offered; (ii) the price and/or credit-terms incentives to be passed on to its own customers to stimulate demand on a temporary basis; and (iii) the quantity to be sold under these one-time-only conditions.