Early sales of seasonal products with weather-conditional rebates

Fei Gao, Ozgun Caliskan Demirag, Frank Y. Chen

Research output: Contribution to journalArticle

19 Scopus citations

Abstract

Some retailers of seasonal products adopt weather-conditional rebate programs to induce early sales and increase profits. In such promotions, customers who buy the product in an advance preselling period are offered rebates if a pre-specified weather condition is realized during the later normal selling season. We investigate the potential benefits of these programs for retailers. We show that the weather-conditional rebate program can increase sales by price discriminating among a customer's post-purchase states. Taking advantage of the early sales, it can also reduce the inventory holding cost and ordering cost, and hence can increase the retailer's expected profits. In addition, we numerically investigate the sensitivity of the rebate program's effectiveness to the model parameters and illustrate its advantages over an advance-discount policy.

Original languageEnglish (US)
Pages (from-to)778-794
Number of pages17
JournalProduction and Operations Management
Volume21
Issue number4
DOIs
StatePublished - Jul 1 2012

All Science Journal Classification (ASJC) codes

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

Fingerprint Dive into the research topics of 'Early sales of seasonal products with weather-conditional rebates'. Together they form a unique fingerprint.

  • Cite this