Optimal threshold in the group-buying auction with replenishment postponement

The group-buying auction is often used in the B2C market. The seller here is offered a quantity-discount-price contract and implements a replenishment postponement policy. We show that when customer's valuation follows a uniform distribution, the group-buying auction does not always outperform the fixed pricing. The optimal group-buying threshold is shown to depend on only purchasing costs, prices and the upper bound of customer's valuation.

[1]  Y. Chen,et al.  Optimal pricing and inventory control policy in periodic‐review systems with fixed ordering cost and lost sales , 2006 .

[2]  L. Joseph Thomas.  Technical Note - Price and Production Decisions with Random Demand , 1974, Oper. Res..

[3]  Hersen Doong,et al.  The Effect of Price Dispersion in an e-Market on Consumers’ Intentions to Join Group Buying , 2006, Proceedings of the 39th Annual Hawaii International Conference on System Sciences (HICSS'06).

[4]  Woonghee Tim Huh,et al.  Inventory Management with Auctions and Other Sales Channels: Optimality of (s, S) Policies , 2008, Manag. Sci..

[5]  Garrett J. van Ryzin,et al.  Optimal Auctioning and Ordering in an Infinite Horizon Inventory-Pricing System , 2004, Oper. Res..

[6]  Qing Li,et al.  Joint Inventory Replenishment and Pricing Control for Systems with Uncertain Yield and Demand , 2006, Oper. Res..

[7]  Jian Chen,et al.  Comparison of the group-buying auction and the fixed pricing mechanism , 2007, Decis. Support Syst..

[8]  Robert J. Kauffman,et al.  Cooperation in Group-Buying Auctions , 2006, Proceedings of the 39th Annual Hawaii International Conference on System Sciences (HICSS'06).

[9]  Krishnan S. Anand,et al.  Group Buying on the Web: A Comparison of Price-Discovery Mechanisms , 2003, Manag. Sci..

[10]  Awi Federgruen,et al.  Combined Pricing and Inventory Control Under Uncertainty , 1999, Oper. Res..

[11]  Yunhui Liu,et al.  Segmenting uncertain demand in group-buying auctions , 2010, Electron. Commer. Res. Appl..

[12]  T. M. Whitin.  Inventory Control and Price Theory , 1955 .

[13]  Jian Chen,et al.  Bidder's strategy under group-buying auction on the Internet , 2002, IEEE Trans. Syst. Man Cybern. Part A.

[14]  Bin Wang,et al.  New buyers' arrival under dynamic pricing market microstructure: the case of group-buying discounts on the Internet , 2001, Proceedings of the 34th Annual Hawaii International Conference on System Sciences.