Early Sales of Seasonal Products with Weather‐Conditional Rebates

Fei Gao, Ozgun Caliskan Demirag and Frank Y. Chen

Production and Operations Management, 2012, vol. 21, issue 4, 778-794

Abstract: Some retailers of seasonal products adopt weather‐conditional rebate programs to induce early sales and increase profits. In such promotions, customers who buy the product in an advance preselling period are offered rebates if a pre‐specified weather condition is realized during the later normal selling season. We investigate the potential benefits of these programs for retailers. We show that the weather‐conditional rebate program can increase sales by price discriminating among a customer's post‐purchase states. Taking advantage of the early sales, it can also reduce the inventory holding cost and ordering cost, and hence can increase the retailer's expected profits. In addition, we numerically investigate the sensitivity of the rebate program's effectiveness to the model parameters and illustrate its advantages over an advance‐discount policy.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://doi.org/10.1111/j.1937-5956.2011.01298.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:21:y:2012:i:4:p:778-794

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1111/(ISSN)1937-5956

Access Statistics for this article

Production and Operations Management is currently edited by Kalyan Singhal

More articles in Production and Operations Management from Production and Operations Management Society
Bibliographic data for series maintained by Wiley Content Delivery ().