Mixed bundle retailing under a stochastic market

作者：Chew Ek Peng; Lee Loo Hay; Wang Qiang^*

来源：Flexible Services and Manufacturing Journal, 2015, 27(4): 606-629.

DOI：10.1007/s10696-014-9206-y

• Inventory
• Pricing
• Mixed bundling
• Stochastic programming

Bundling is a pervasive marketing strategy in real business. In this paper, we study the strategy of mixed bundling under a stochastic market for two products for a retailer who has monopolistic power in the market, and the bundle consists of one unit of each individual product. The retailer needs to make joint pricing and inventory decisions with the aim of maximizing expected profit. Firstly, the relationship between the prices and market shares of the three bundle variations in the mixed bundling strategy is modeled after the reservation price model, which is commonly adopted in the bundling literature. Based on the market shares, a two-stage stochastic model is proposed to determine inventory decisions, including the ordering decision before the selling season starts and the allocation decisions after demands are realized. Global concavity in the order quantities is demonstrated. For experimental purposes, an algorithm incorporating both pricing and inventory decisions is presented. We measure the importance of incorporating inventory matters into bundling decisions under the stochastic market by calculating expected loss of profit, which can exceed 5 % under some parameter settings. In the numerical experiments, we identify two attributes of mixed bundling performance, which are bundling pricing effect and inventory pooling effect.

• 出版日期2015-12