Advance Selling Strategies for Retailers Taking into Account the Time-value of Money

Abstract

Abstract:

Advance selling occurs when sellers allow buyers to purchase at a time preceding consumption. Existing researches on advance selling mainly focus on pricing strategies while the quantification of lead-time is seldom discussed. Considering price and lead-time in ad-vance selling as variables, we establish an optimization model under the framework of Stackelberg game. By comparing results from the model with realistic cases, we find that the optimum advance selling strategies should consist of two categories:super low price with ul-tra-long lead-time and reasonable price discount with short lead-time. Further analysis on the two strategies identifies the conditions under which the profit is maximized. Finally, we use numeric examples to illustrate the relationship between the two typical strategies and to verify the conclusions drawn in this paper.

Key words: advance selling, time-value of money, customer preference, MI, Huawei

Yan Zhanghua, Liu Lei. Advance Selling Strategies for Retailers Taking into Account the Time-value of Money[J]. , 2018, 30(5): 262-272.

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