The Impact the Price Promotion Has on the Manufacturer’s Performance

Wenting Pan, Yung-Jae Lee, Tina Zhang

2013

Abstract

We consider a supply chain network where there is one manufacturer and multiple identical retailers in a consumer non-durable market. The retail purchase price is exogenous, and demand is deterministic. The retailers apply the Economic Order Quantity (EOQ) model to minimize the total cost. In observation of the manufacturer’s periodic instantaneous promotion, the retailers would place a one-time order from the manufacturer to take advantage of the deal during the promotion period. The objective of this paper is to examine the impact this price promotion has on the manufacturer’s performance. We find that this promotion policy has a negative impact on the manufacturer’s performance. Interestingly, we also find that this negative impact is less damaging when the utilization of the facility is lower.

References

  1. Ailawadi K., P. Farris, and E. Shames, (1999): “Trade Promotion: Essential to Selling through Resellers”, Sloan Management Review, 41, 1, 83-96.
  2. Buzzell, R. D., J. A. Quelch, and W. J. Salmon, (1990): “The Costly Bargain of Trade Promotion”, Harvard Business Review, 68, 2, 141-149.
  3. Jones, J. P. (1990): “The Double Jeopardy of Sales Promotions”, Harvard Business Review, 68, 5, 145- 152.
Download


Paper Citation


in Harvard Style

Pan W., Lee Y. and Zhang T. (2013). The Impact the Price Promotion Has on the Manufacturer’s Performance . In Proceedings of the 2nd International Conference on Operations Research and Enterprise Systems - Volume 1: ICORES, ISBN 978-989-8565-40-2, pages 343-346. DOI: 10.5220/0004341103430346


in Bibtex Style

@conference{icores13,
author={Wenting Pan and Yung-Jae Lee and Tina Zhang},
title={The Impact the Price Promotion Has on the Manufacturer’s Performance},
booktitle={Proceedings of the 2nd International Conference on Operations Research and Enterprise Systems - Volume 1: ICORES,},
year={2013},
pages={343-346},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0004341103430346},
isbn={978-989-8565-40-2},
}


in EndNote Style

TY - CONF
JO - Proceedings of the 2nd International Conference on Operations Research and Enterprise Systems - Volume 1: ICORES,
TI - The Impact the Price Promotion Has on the Manufacturer’s Performance
SN - 978-989-8565-40-2
AU - Pan W.
AU - Lee Y.
AU - Zhang T.
PY - 2013
SP - 343
EP - 346
DO - 10.5220/0004341103430346