Joint pricing and replenishment policies for group-buying auction. (1st January 2014)

• Record Type: Journal Article
• Authors: Tai, Allen H.
• Is Part Of: International journal of intelligent engineering informatics. Volume 2: Number 4 (2014)
• Page Start: 271
• Page End: 283
• Publication Date: 2014-01-01
• Subjects: group-buying -- inventory model -- replenishment policy -- optimal pricing; Artificial intelligence -- Engineering applications -- Periodicals; Engineering -- Computer programs -- Periodicals; Knowledge management -- Periodicals; 620.0028563
• DOI: 10.1504/IJIEI.2014.067175
• Languages: English
• ISSNs: 1758-8715

Abstract

Group-buying auction has become a popular marketing strategy in the last decade. In this paper, a stochastic model is developed for an inventory system subjects to price-sensitive demand from group-buying auctions. The model discussed here takes into account the costs of inventory, transportation, dispatching and re-order as well as the penalty cost of non-successful auctions. Since a new cycle begins whenever there is a replenishment of products, the long-run average profit can be obtained by using the renewal theory. Closed form solution of the optimal replenishment quantity is derived and an optimal unit selling price is then obtained.