Advance selling to strategic consumers

Michelle M. H. Şeref (), Onur Şeref (), Aydın Alptekinoğlu () and S. Selçuk Erengüç ()
Additional contact information
Michelle M. H. Şeref: Virginia Polytechnic Institute and State University
Onur Şeref: Virginia Polytechnic Institute and State University
Aydın Alptekinoğlu: The Pennsylvania State University
S. Selçuk Erengüç: The University of Florida

Computational Management Science, 2016, vol. 13, issue 4, No 5, 597-626

Abstract: Abstract Advance selling of goods and services is a form of separating purchase from consumption. It is often employed when consumers are uncertain about their consumption utilities until a short time period before consumption. A book to be released, a concert to attend, or a cruise to take are some examples. Invariably, in consumers’ mind inventory availability (of copies, seats, or rooms) is a concern. In this paper we study a retailer’s inventory and pricing decisions in an advance selling scenario that involves consumers who are strategic. Some consumers not only consider advance and spot prices, but also the uncertainty in future availability of the product (during the spot period) and in their consumption utility from it. We characterize the optimal inventory management and pricing policies, and discuss several interesting aspects of the solution. For example, it can be optimal for the retailer to limit advance sales even if there is more demand for it, and it can be optimal for the retailer to limit its inventory even though there is more capacity to keep it, but not both.

Keywords: Inventory management; Advance selling; Pricing; Strategic consumers; 90B05; 90B50; 90B60 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s10287-016-0264-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:comgts:v:13:y:2016:i:4:d:10.1007_s10287-016-0264-3

Ordering information: This journal article can be ordered from
http://www.springer. ... ch/journal/10287/PS2

DOI: 10.1007/s10287-016-0264-3

Access Statistics for this article

Computational Management Science is currently edited by Ruediger Schultz

More articles in Computational Management Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().