Decision-making on preservation effort and inventory volume for fresh retailer under strategic consumer behavior
Chuanbo Zhu, Whenyou Zhan
TL;DR
This paper explores how fresh retailers make decisions about product freshness and inventory when customers behave strategically.
Contribution
The study introduces a model analyzing how perceived customer value and market size influence freshness preservation and inventory decisions.
Findings
Retailers lower prices when customers value freshness near sell-by dates, reducing investment in preservation.
Market size significantly affects how retailers balance preservation efforts and inventory levels.
In small markets, customer behavior and value perception have a stronger impact on retailer decisions.
Abstract
Based on the theory of rational expectations equilibrium, this study examines the optimal decision-making of fresh retailer under strategic customer behavior. The paper focuses on analyzing the impact of perceived customer value on the retailer’s investment in freshness preservation and configuration in inventory, as well as how market size moderates this influence. The findings reveal that in the face of strategic customer behavior and an increased perception of value for the freshness of products nearing their sell-by date, the retailer tends to lower retail prices, which subsequently affects their enthusiasm for investment in freshness preservation efforts and inventory configuration. The influence of perceived customer value on preservation effort and inventory volume is differential and significantly moderated by market size. When the market size is large, the retailer is inclined…
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Taxonomy
TopicsSupply Chain and Inventory Management · Consumer Market Behavior and Pricing · Consumer Retail Behavior Studies