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- Publisher
- INFORMS
- Copyright
- Copyright © INFORMS
- Subject
- Research Article - Focused Issue: The Use of Information in Managing Supply Chains, Part 1 of 2
- ISSN
- 1523-4614
- eISSN
- 1526-5498
- DOI
- 10.1287/msom.3.1.53.9993
- Publisher site
- See Article on Publisher Site
Abstract
A monopolist sells a single product to a market where the customers may be enticed to accept a delay as to when their orders are shipped. The enticement is a discounted price for the product. The market consists of several segments with different degrees of aversion to delays. The firm offers a price schedule under which the customers each self-select the price they pay and when their orders are to be shipped. When a customer agrees to wait, the firm gains advanced demand information that can be used to reduce its supply chain costs. This article shows how an optimal pricing-replenishment strategy that balances the costs due to discounted prices and the benefits due to advanced demand information can be determined.
Journal
Manufacturing & Service Operations Management – INFORMS
Published: Jan 19, 2001
Keywords: Keywords : Supply Chain Management ; Market Segmentation ; Pricing ; Shipping Delays ; Value of Information ; Product Variety