Item Sold Research Articles

Markets: Gift Cards

The Mobil Oil Company introduced the first retail gift card that recorded value on a magnetic strip in 1995. In under a decade, such gift cards replaced apparel as the number one item sold during the Christmas season. This study will discuss the reasons for the strong surge in the gift card market. It will then consider the value of gift cards as an intermediate option between two alternatives: purchasing a physical gift, which could possibly be returned or exchanged, versus giving cash. Empirical data on the resale price of gift cards from an Internet auction website provide information on the value that recipients place on gift cards suggesting that the difference between the cost of a gift card to the giver and its value to the recipient is substantial, although perhaps not quite as large as the parallel gap involved in physical gifts.

Restaurant Menu Analysis

As costs continue to escalate, menu analysis has once again become a significant topic of interest among foodservice professionals. A variety of menu analysis methods were discussed in hospitality literature over the last 30 years. Despite the fact that they offer different approaches and focus on different characteristics, they all have a common goal of finding a strategy that will help restaurant managers reveal more profitable menu items and possibly increase menu profitability. This article proposes an index method that helps to determine changes in overall menu contribution margin based on changes in contribution margin per individual menu item, proportion of sold items, and quantity of menu items sold. This method is meant to be a supplementary tool for analysis to support and enhance current menu analysis techniques.

Macroergonomic Principles of Automated Performance Measurement

Retail associate productivity has increased dramatically over the last 15 years with the use of ever more sophisticated scanners and point of sale (POS) terminals. Data warehouses enable businesses to store remarkable detail about each transaction. Analyses of these data tend to focus on the items sold and money collected. However, if these systems also collect timestamp data of important events during transactions retailers would then have the basis for measuring associate activity. This paper discusses the macroergonomic principles that must guide the design of cashier performance measurement systems in the retail setting. Following these guidelines leads not only to increased manager effectiveness, but also to more accurate measurement of activity. It can also improve associates morale and the likelihood of incenting desirable and productive behaviors. These principles are generalizable to other domains in which automated performance measurement takes place.

Two-dimensional warranty repair strategy based on minimal and complete repairs

For repairable products, the warrantor has options in choosing the degree of repair applied to an item that has failed within the warranty period. We focus on a particular warranty repair strategy, related to the degree of the warranty repair, for non-renewing, two-dimensional, free of charge to the consumer warranty policy. We consider a rectangular warranty region and divide it into three disjoint subregions, so that each of these subregions has a preassigned degree of repair for a faulty item. Our main goal is to determine the subregions, so that the associated expected warranty servicing cost per item sold is minimised. A comparison between our strategy and previously studied, more restrictive, ones is provided.

When Little Things Mean a Lot: On the Inefficiency of Item Pricing Laws

Item pricing laws (IPLs) require a price tag on every item sold by a retailer. We study IPLs and assess their efficiency by examining and quantifying their costs and comparing them to their measurable benefits. On the cost side, we posit that IPLs should lead to higher prices because they increase the cost of pricing as well as the cost of price adjustment. We test this prediction using data collected from large supermarket chains in the Tri-State area of New York, New Jersey and Connecticut, which offer a unique setting because these states vary in their use of IPLs, but otherwise offer geographical proximity with each other and similar markets, supermarket chains, and socioeconomic environments. We find that IPL store prices are higher by about 20¢-25¢ or 8.0%-9.6% per item on average, in comparison to non-IPL stores. As a control, we use data from stores that are exempted from IPL requirements (because they use electronic shelf labels), and find that their prices fall between IPL and non-IPL store prices. To assess the efficiency of IPLs, we compare these costs to existing measures of the benefits of IPLs. Specifically, we study the frequency and magnitude of pricing errors, which the IPLs are supposed to prevent. We find that the IPLs' costs are an order of magnitude higher than these benefits.

Privacy Issues of Applying RFID in Retail Industry

Retail industry poses typical enterprise computing challenges, since a retailer normally deals with multiple parties that belong to different organizations (i.e., suppliers, manufacturers, distributors, end consumers). Capable of enabling retailers to effectively and efficiently manage merchandise transferring among various parties, Radio Frequency Identification (RFID) is an emerging technology that potentially could revolutionize the way retailers do business. With the dramatic price drop of RFID tags, it is possible that RFID could be applied to each item sold by a retailer. However, RFID technology poses critical privacy challenges. If not properly used, the data stored in RFID could be abused and, thus, cause privacy concerns for end consumers. In this article, we first analyze the potential privacy issue of RFID utilization. Then we propose a privacy authorization model that aims to precisely define comprehensive RFID privacy policies. Extended from the role-based access control model, our privacy authorization model ensures the special needs of RFID-related privacy protection. These policies are designed from the perspective of end consumers, whose privacy rights potentially could be violated. Finally, we explore the feasibility of applying Enterprise Privacy Authorization Language (EPAL) as the vehicle for specifying RFID-related privacy rules.

Effect of Buyer and Seller Experience on Buy It Now Pricing

ABSTRACT Although auctions have been around for centuries, online auctions are still a relatively new phenomenon. This paper examines the phenomenon of online auctions, specifically on a pricing option known as “Buy It Now.” With this option, a buyer can purchase merchandise immediately at a stated price and truncate the auction process. Auction items sold with a Buy It Now price tend to be at a higher price than the high bid price for an identical item sold through an ascending-bid auction. In addition, Buy It Now prices tend to attract risk averse bidders while high bidders of ascending-bid auctions tend to be less risk averse or risk neutral bidders. On the other hand, we found more experienced sellers sell their items with a Buy It Now price while less experienced sellers sell their items through an ascending-bid process. Thus, experience and risk are factors in choosing a Buy It Now price for the seller and buyer.

The Role of the Bidding Process in Price Determination: Jump Bidding in Sequential English Auctions

I study the sequence of bidding in an open-outcry English auction to examine how the strategic bidding process affects price determination. I do this by studying the anomalous nature of jump bidding in data I have collected from a series of public auctions of used cars in New Jersey. Jump bidding occur when a new offer is submitted that is above the old offer plus the minimum bid increment permitted. I find that jump biddings are an empirical regularity in all items sold. The jumps are a function of the presale estimate of the item's price but are not affected by the selling order. I suggest a way to use the Jump Biddings to determine whether an open-outcry auction is best interpreted with models that assume private- or common-item valuations, and conclude that these auctions are consistent with the common values interpretation.

Channel Performance Under Consignment Contract with Revenue Sharing

Under a consignment contract with revenue sharing, a supplier decides on the retail price and delivery quantity for his product, and retains ownership of the goods; for each item sold, the retailer...

Deterministic Inventory Model of Deteriorating Items Sold from Two Shops Under a Single Management

This paper deals with two shops (primary and secondary) inventory models of deteriorating items under single management. After replenishment, fresh and deteriorated units (measured in amount) are separated first, then fresh units are stocked and sold from the primary shop with a profit, whereas the deteriorated units are continuously transferred to the secondary shop as and when they are deteriorated and sold from this shop at a reduced price. This model considers the impact of pricing and stock-dependency in demand as well as backorder decision in the primary shop on the profitability of the system. To meet up the backlogged units, the management purchases higher priced fresh units along with the lot. Finally, a numerical examples is used to study the behaviour of the model.

Replacement–repair policy for multi-state deteriorating products under warranty

In this paper we study a warranty servicing policy for a class of multi-state deteriorating and repairable products. The manufacturer's decision to repair or replace a failed item depends on two parameters, the deterioration degree of the item and the length of the residual warranty period. We examine the optimal value of these two parameters to minimize the manufacturer's expected warranty servicing cost per item sold.

Two-Dimensional Failure-Free Warranty Policies: Two-Dimensional Point Process Models

A two-dimensional warranty policy is characterized by a region in a two-dimensional plane with the horizontal axis representing time and the vertical axis the usage. In this paper, we study two-dimensional failure-free warranty policies for nonrepairable items that require the manufacturer to replace all items which fail under warranty by new ones at no cost to the buyer. We derive expressions for the expected warranty cost per item sold and for the expected life cycle cost for four different warranty regions. We illustrate these by numerical examples and discuss some resulting implications for the consumer and the manufacturer.

Value Pricing

Value pricing-trying to increase revenues by discounting menu prices-can be profitable but is risky. Some food-service companies use value pricing to increase market share, taking advantage of highly elastic demand for quick-service food. Operators considering value pricing can use a technique called goal-value analysis to determine the buyer response necessary for value pricing to increase profits. Goal-value analysis can determine the relative profitability of a single menu item or an entire menu. The analysis uses portion costs, item prices, variable costs, and the number of items sold. The formula trades a small amount of accuracy for simplicity, but it has been found to be superior to many other menu-analysis systems. Goal-value analysis is especially useful as a means of observing the dynamics involved in value pricing.

Design of a two-stage procedure for three-class screening

A two-stage screening procedure is developed for a situation where an item is sold in one of two markets or scrapped. The item's selling price and product specifications are different in both markets. In the first stage of the procedure, each item is inspected on a surrogate variable that is correlated with the perfornance variable of interest. If a decision is not reached at this point, the item is subjected to the second-stage of the procedure where it is inspected on the performance variable, and a classification decision is made. A loss in revenue is incurred by the producer when an item that meets the specifications of the higher-price market is sold in the lower-price market. The producer also sustains a cost when an item that does not conform to the product specifications of a market is sold in that market. The economic factors considered in the model, therefore, are the selling prices and the cost consequences resulting from decision errors. The optimal screening specification limits for known-parameter and unknown-parameters situations are derived by maximizing the expected profit per item.

A STOCHASTIC SINGLE-PERIOD INVENTORY SYSTEM WITH RANDOM YIELDS AND QUALITIES

This paper considers a single-period inventory model where a commodity may be ordered from one of several suppliers with various yields and qualities. Two variations of this model are investigated. First it is assumed that replenishment quantities (yields) follow variability orderings (defined in Sec. 2) and shown that, if the purchasing, holding, and shortage costs are increasing and convex, and the the cost of quality loss is negligible, then ordering from the supplier with the smallest yield variability minimizes the expected cost of the period. In the second variations it is assumed that the replenishment quantities and qualities from the suppliers follow variability orderings, where the quality of an item is represented by a measurement z. An item sold with measurement z is subject to a quality loss l(z), where l(z) is a convex function taking the minimum at the target measurement. It is shown that if the purchasing, holding, and shortage cost functions are linear and increasing, then selecting the supplier with the smallest yield and quality variabilities minimizes the expected cost of the period.

Grounded Beefs: Monopoly Prices, Minority Business, and the Price of Hamburgers at U. S. Airports

Recently in an attempt to improve the quality and appearance of airport food and merchandise, both concessionaires and airport officials have made a concentrated effort to change the way they do business (Weinstein and Madrigal, 1991; Finney, 1991) They are shying away from selling hackneyed tourist items and stale hotdogs. They are changing the type of merchandise they carry and are offering brand name products. Wellknown merchandise is replacing standard airport selections. It is not unusual to find familiar dining and snacking opportunities (Pizza Hut, Nathan's, and Mrs. Field's cookies) and popular fashion and merchandising selections (Walt Disney, Bloomingdales, and Benjamin Books). With merchandise that resembles the selection available at many shopping malls, the belief is that more passengers will be more willing to spend their time in airports spending money on familiar products. Despite these changes, the price of the merchandise is usually more than one would pay for the same product in a shopping mall or in the area surrounding the airport. For example, a hotdog at Baltimore-Washington International (BWI) airport ranges between $1.50 and $1.69, but at Hardees outside the airport it is $99. A hamburger; at BWI costs $1.89; outside the airport, at Wendy's, it is $.89. Coffee is $1.09 at National Airport, $1.09 at Dulles, $.89 at BWI, and $.72 at a neighborhood 7-11. At the BWI Pizza Hut, all single pan pizzas are $2.99; at a neighborhood Pizza Hut, the same thing is $1.99 for plain, or $2.29 for pepperoni or sausage. Table 1 shows the results from a survey of the prices of several food and nonfood items sold by three airports in the Washington, DC area, and compared with the prices of he same items sold by a local drugstore and convenience store. Although some individual items sold at airports cost less than the same item sold elsewhere, in every case, the total marketbasket of items sold at an airport costs more than the same marketbasket purchased at a nearby convenience store or drug store. Table 1 Comparable Marketbaskets of Items Sold at Washington, DC Area Airports and Local Drug/Convenience Stores Pair 1 (12 items) Average Price($) National Airport 17.67 Peoples Drugstore 14.52 Pair 2 (13 items) National Airport 16.72 7-11 15.65 Pair 3 (11 items) Dulles Airport 16.51 Peoples Drugstore 13.79 Pair 4 (12 items) Dulles Airport 15.57 7-11 14.86 Pair 5 (9 items) BWI Airport 13.39 Peoples Drugstore 9.89 Pair 6 (10 items) BWI Airport 12.80 7-11 10.38 Source: Washingtonian Magazine, March 1992, p. 16. These price disparities between airport goods and the same items sold in nearby neighborhoods are puzzling for two reasons. First, airport concessionaires are contractually required to sell their goods and services for prices competitive with the area surrounding the airport. The airport administration (AA) is supposed to keep track of prices by comparison shopping; if the prices are too high, the concessionaire required to lower them. Second, there is competition within airports. Many airports have more than one newsstand, more than one place selling clothes or toys or gifts, and numerous places to eat. Assuming that the real costs of doing business in an airport are no higher than the costs of doing the business in, say, a shopping mall, the presence of numerous sellers should prevent any one seller from collecting monopoly rents by exploiting the consumers' somewhat captive location at an airport. Yet, despite administrative rules and competitive forces that should the price of airport food and merchandise at competitive levels, keep often remain higher than outside the airport. In this article, we explain how the institutional design of airport administration leaves neither the airport administrator nor the concessionaires with the incentive set rices competitively. …

A Society without Poverty—The Norwegian Experience

Yes, there is another way. I went to Norway to teach American methods of alcoholism treatment and to learn of life in a welfare state. My stay of almost two years informed me in the way that firsthand experience informs--rudely, indelibly. My family and I have experienced the Norwegian community--the schools, social services, the health care system. And I have come to see how each dimension is connected to every other dimension of the cultural whole. In the high quality of life in Norway is the key to the larger pattern. To the American visitor, the lack of poverty is striking, even puzzling. The outsider is inclined to see what is in terms of what is not: the southerner noting, for instance, the complete absence of palm trees. The Norwegian, meanwhile, is aware neither of the lack of poverty nor the absence of palm trees. To understand the lack of poverty, you have to first understand poverty. And I am speaking of poverty in a rich society, there being no need to explain poverty in the absence of resources. The sociologists of the 1960s conceived of the existence of poverty in a prosperous society as functional for the total community. What were the social functions of poverty? (For a literature review, see Blau, 1988.) Poverty or the threat of poverty provided a steady pool of compliant workers; poverty provided jobs for bureaucrats who were to ameliorate the poverty; the poverty of some provided for a natural division of classes. The existence of poverty in America is consistent with teachings of the Protestant ethic and the survival-of-the-fittest mentality. Whereas Americans think individually, Norwegians tend to think collectively. Whereas Americans value competition, Norwegians value cooperation. The thesis of this article is that poverty persists in the United States because our values say it will persist. It does not persist in Norway because the society chooses not to tolerate it. This article examines the general economic conditions in Norway and views them against the Norwegian cultural context--values of egalitarianism and the collective will, trust in the social system, and above all a tradition of kindness to the weaker members of society. Implications for the United States and for American social workers are drawn. Norwegian Economy Norway is a socialist country in terms of social policy but a capitalist nation in terms of the ownership of business. Because of Norwegian control of North Sea oil industries, a great deal of wealth is available to the nation. This fact helps compensate for the poor agricultural conditions--rocky, mountainous land and a short growing season. Personal income taxes in Norway are among the highest in the world. The higher the income, the higher the percentage of taxes paid. The value-added tax is a sales tax of 20 percent on virtually all items sold. Consequently, food and services are extremely expensive in Norway. Income differences across occupational groups are relatively slight. Virtually no group of employees earns more than twice the average earnings of all employees (Selbyg, 1987). The equalization of income is a reality in Norway. Poverty Official estimates put the percentage of people living in poverty at 16.0 percent in the United States and 4.8 percent in Norway (Zimbalist, 1988). In fact, these figures were based on relative income in each country. My personal impression is that the gap between poverty in the United States and Norway is much higher than the numbers indicate. Even in my work with alcoholics, I did not come across one truly impoverished person. When an individual gets into economic trouble, the state provides help. Statistics on poverty thus do not portray the reality in a cradle-to-grave, highly protective society. Kohlert's (1989) description of the universalism philosophy in welfare is pertinent to Norway. Universalism views those in need as no different from other people. …

Economic Terror in the City: The General Maximum in Montauban

The municipal police shall fine everyone who buys or sells merchandise for more than the Maximum, . . . double the value of the item sold, payable to the person who denounced them; they will be recorded on the list of suspect persons and treated as such. The buyer will not be subject to these penalties if he denounces the seller's violation, and each merchant must post in his shop a table of the Maximum or the highest price of his merchandise. General Maximum, article 7, 29 September 17931

Concentration and price

Does seller concentration in a market raise prices? Many attempts have been made to test this classic hypothesis of oligopoly theory, none of them convincing. Leonard Weiss and his colleagues have devised and applied a systematic set of direct tests of the concentration price hypothesis. In an innovative series of empirical studies, they examine the effect of concentration on price for the same item sold in markets that vary because of space, time, or transaction. They conclude that concentration does indeed tend to raise price.Studies in the book's first part test specific aspects of the concentration price hypothesis. These include a case study of Portland cement deregulated fares, the relation between change in price and change in concentration in the US and in the EEC, the effect of the numbers of bidders in auctions, and the effects of concentration on wages.The book's second part brings together for the first time previously published and widely scattered studies of the concentration price relationship in advertising media, retailing, the railroads, livestock purchasing, and banking. Viewed together, they provide powerful support for the role of concentration in determining price.Leonard W. Weiss is Professor of Economics at the University of Wisconsin, Madison.P>

Damage to finished goods inventory in A dynamic environment A markov chain model for the arts and crafts industry

A Markov chain model is presented as a tool for analysis of damage caused to an inventory of items which are subject to possibly many movements prior to sale. The model is applied to a case study to describe the nature and extent of such damage. However, possible extensions to other more general inventory-marketing distribution problems are clear. The states “item sold” and “item scrapped” are modelled as absorbing states while the locations of the items “in rework” and “at market” are transient states. Standard Markov chain calculations are made which then describe the expected status of the inventory.