 The role of retailer's performance in optimal wholesale price discount policiesIgor Bykadorov, Andrea Ellero (), Elena Moretti and Silvia Vianello European Journal of Operational Research, 2009, vol. 194, issue 2, 538-550 Abstract: The main goal of this paper is to model the effects of wholesale price control on manufacturer's profit, taking explicitly into account the retailer's sales motivation and performance. We consider a stylized distribution channel where a manufacturer sells a single kind of good to a single retailer. Wholesale price discounts are assumed to increase the retailer's motivation thus improving sales. We study the manufacturer's profit maximization problem as an optimal control model where the manufacturer's control is the discount on wholesale price and retailer's motivation is one of the state variables. In particular in the paper we prove that an increasing discount policy is optimal for the manufacturer when the retailer is not efficient while efficient retailers may require to decrease the trade discounts at the end of the selling period. Computational experiments point out how the discount on wholesale price passed by the retailer to the market (pass-through) influences the optimal profit of the manufacturer. Keywords: Wholesale; price; Sales; motivation; Optimal; control (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:194:y:2009:i:2:p:538-550 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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