Channel coordination through discount pricing policies when demand is price and effort dependent

Yao-Yu Wang; Hon-Shaing Lau

doi:10.1109/IEEM.2010.5674463

Channel coordination through discount pricing policies when demand is price and effort dependent

Yao-Yu Wang, Hon-Shaing Lau

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

Abstract

In this paper, we investigate the performance of discount pricing policies as coordination mechanisms in decentralized channels where demand is sensitive to both price and sales effort. Most related studies have shown that volume discount is an effective channel coordination device. However, our paper shows that, when demand is affected by both price and sales effort, regular volume discount not only is unable to coordinate the channel effectively, but some times it performs even worse than the simple price-only contract. Fortunately, our results show that a continuous volume discount schedule can perfectly coordinate such an effort-sensitive channel. ©2010 IEEE.

Original language	English
Title of host publication	IEEM2010 - IEEE International Conference on Industrial Engineering and Engineering Management
Pages	270-274
DOIs	https://doi.org/10.1109/IEEM.2010.5674463
Publication status	Published - 2010
Event	2010 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM2010) - Venetian Macao Resort Hotel, Macao, China Duration: 7 Dec 2010 → 10 Dec 2010

Conference

Conference	2010 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM2010)
Place	China
City	Macao
Period	7/12/10 → 10/12/10

Research Keywords

Channel coordination
Quantity discount contracts
Sales effort
Stackelberg game

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10.1109/IEEM.2010.5674463

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title = "Channel coordination through discount pricing policies when demand is price and effort dependent",

abstract = "In this paper, we investigate the performance of discount pricing policies as coordination mechanisms in decentralized channels where demand is sensitive to both price and sales effort. Most related studies have shown that volume discount is an effective channel coordination device. However, our paper shows that, when demand is affected by both price and sales effort, regular volume discount not only is unable to coordinate the channel effectively, but some times it performs even worse than the simple price-only contract. Fortunately, our results show that a continuous volume discount schedule can perfectly coordinate such an effort-sensitive channel. {\textcopyright}2010 IEEE.",

keywords = "Channel coordination, Quantity discount contracts, Sales effort, Stackelberg game",

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language = "English",

isbn = "9781424485031",

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Wang, Y-Y & Lau, H-S 2010, Channel coordination through discount pricing policies when demand is price and effort dependent. in IEEM2010 - IEEE International Conference on Industrial Engineering and Engineering Management., 5674463, pp. 270-274, 2010 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM2010), Macao, China, 7/12/10. https://doi.org/10.1109/IEEM.2010.5674463

Channel coordination through discount pricing policies when demand is price and effort dependent. / Wang, Yao-Yu; Lau, Hon-Shaing.
IEEM2010 - IEEE International Conference on Industrial Engineering and Engineering Management. 2010. p. 270-274 5674463.

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

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AU - Wang, Yao-Yu

AU - Lau, Hon-Shaing

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N2 - In this paper, we investigate the performance of discount pricing policies as coordination mechanisms in decentralized channels where demand is sensitive to both price and sales effort. Most related studies have shown that volume discount is an effective channel coordination device. However, our paper shows that, when demand is affected by both price and sales effort, regular volume discount not only is unable to coordinate the channel effectively, but some times it performs even worse than the simple price-only contract. Fortunately, our results show that a continuous volume discount schedule can perfectly coordinate such an effort-sensitive channel. ©2010 IEEE.

AB - In this paper, we investigate the performance of discount pricing policies as coordination mechanisms in decentralized channels where demand is sensitive to both price and sales effort. Most related studies have shown that volume discount is an effective channel coordination device. However, our paper shows that, when demand is affected by both price and sales effort, regular volume discount not only is unable to coordinate the channel effectively, but some times it performs even worse than the simple price-only contract. Fortunately, our results show that a continuous volume discount schedule can perfectly coordinate such an effort-sensitive channel. ©2010 IEEE.

KW - Channel coordination

KW - Quantity discount contracts

KW - Sales effort

KW - Stackelberg game

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BT - IEEM2010 - IEEE International Conference on Industrial Engineering and Engineering Management

T2 - 2010 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM2010)

Y2 - 7 December 2010 through 10 December 2010

ER -

Channel coordination through discount pricing policies when demand is price and effort dependent

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