Coordination of Price Promotions and Inventory Policy

Hadjinicola George (), Soteriou Andreas, Pujawan Nyoman and Lacheret Arnaud
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Hadjinicola George: University Avenue 1, University of Cyprus
Soteriou Andreas: University Avenue 1, University of Cyprus
Pujawan Nyoman: Sepuluh Nopember Institute of Technology (ITS)
Lacheret Arnaud: SKEMA Business School - Campus Grand Paris

A chapter in Proceedings of the International Conference on Industrial Logistics (ICIL) 2025, 2026, pp 141-148 from Springer

Abstract: Abstract This paper presents a framework that assists in the coordination of the marketing and operations functions when the firm is adopting price promotions to enhance sales. We investigate the effect of operational factors on price promotions under a periodic review policy. Sales are affected both by price promotions and improved service levels, operationalized through higher safety stocks. The annual number of promotions is treated as a decision variable and the level of the cycle service level as a strategic parameter. We show that operational parameters such as lead time, review period, and inventory holding cost negatively affect the annual number of price promotions to be adopted. This points out that an efficient operations function, as reflected in lower values of the previous three operational parameters, allows the firm to use these cost savings and fund its price promotional campaign. This further points to the fact that an Every-Day-Low-Price (EDLP) program can be supported by the operations function when the lead time and review period are low. Numerical examples demonstrate the above findings.

Keywords: Marketing-Operations Interface; Price Promotions; Periodic Review Policy; Inventory (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnopch:978-3-032-14489-8_15

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DOI: 10.1007/978-3-032-14489-8_15

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