Collaborative Promotions: Optimizing Retail Supply Chains by Daniela Wiehenbrauk

By Daniela Wiehenbrauk

Promotions are whilst loved and feared by means of either meals outlets and branded items brands in today’s retail setting. loved simply because they allure shrewdpermanent consumers and generate an instantaneous influence on a brand’s sale. Feared simply because there's uncertainty concerning the opponents’ habit and the particular client call for resulting in excessive forecast error. For the shop, this leads to a doom loop of over- or understocking with excessive stock bills within the offer chain.

Collaboration among outlets and the producer disentangles the doom loop. The thesis unearths the perfect style and timing of data and develops a so known as pageant Index. stock within the provide chain is eradicated and the client is served greater at a lower cost. in accordance with a joint stock and pricing version and an empirical research, it exhibits that the provision chain potency profits from collaborative promotions bring about a win for purchasers, outlets and the producer.

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Extra resources for Collaborative Promotions: Optimizing Retail Supply Chains with Upstream Information Sharing: 643 (Lecture Notes in Economics and Mathematical Systems)

Example text

Therefore, extracting a specific retailer is not possible due to the similar market shares of the leading retailers (also see Chap. 6 for a detailed analysis). However, the definition of the Competition Index allows conclusions regarding how the average competitor behaves. 10 01 10 20 30 40 50 week Retailer A Retailer B Retailer C Retailer D Retailer E Fig. 5 Prices for a diapers brand at five major German retailers, 2003. 4 Research Questions and Methods The objective of this dissertation is to determine the value of upstream information sharing, in form of the Competition Index, for customers, retailers and a manufacturer.

Promotions and Inventory Sogomonian and Tang (1993) investigate the benefit of coordinating promotion and production decisions for a retailer. The decisions include the timing and level of a promotion as well as the order quantity. In order to evaluate the benefits of coordinated decisions, the authors formulate two problems: a baseline model, where the production and promotion decisions are made separately and an integrated model, where the two decisions are made jointly. A numerical example provides evidence that with the integrated approach, the net profit increases by 12%, which justifies the importance of coordinating promotion and production decisions.

Obviously a retailer promoting at a regular pattern is highly predictable to both its customers and its competitors. In terms of customer retention, this is positive: customers adapt to this cycle and the retailer wins them as so called “loyal customers” who purchase in promotions. In terms of competition, the pattern can have negative effects: the retailer is at the risk of being undercut. The impact of pattern promotions has been highlighted by Krishna (1994), but has otherwise received little attention in the literature.

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