Discounting Strategy Research Articles

Optimal rebate strategies in a two-echelon supply chain with nonlinear and linear multiplicative demands

We examine the pure rebate strategies in a two-echelon supply chain under stochastic demand with multiplicative error. Given exogenous wholesale price and retail price, we characterize the unique Nash equilibrium when both manufacturer and retailer provide rebate policy to consumers under nonlinear and linear price-dependent demand functions, including iso-elastic multiplicative demand function (EMDF) and linear multiplicative demand function (LMDF). Based on a game theoretical framework, we prove that there still exists a unique equilibrium when the price elasticity is rather small with constraint conditions in the former case. We also find that in this case the retailer(manufacturer) may increase its rebate value in reaction to the manufacturer's(retailer's) rebate value in order to stimulate sales, which is contrary to the conventional wisdom that the retailer(manufacturer) will shrink its rebate value to gain an ``extra advantage unfairly. As a result, both parties share the same profit at equilibrium. Further, we compare the expected profit outcomes at equilibrium among joint-rebate game, single-party rebate game and no-rebate game by using numerical examples. It is shown that the joint-rebate policy is not always dominates the others unless the price elasticity is sufficiently flexible.

Two tuned multi-objective meta-heuristic algorithms for solving a fuzzy multi-state redundancy allocation problem under discount strategies

In this study, a bi-objective multi-state redundancy allocation problem of series–parallel systems consisting of some serial subsystems, each with non-repairable components in parallel, is investigated. Furthermore, due to uncertainty involved, both the performance rates and the availabilities of components are considered fuzzy. In addition, two strategies of all-unit and incremental-quantity discounts are used to purchase the components and that the fuzzy universal generating function (FUGF) is employed to evaluate the system availability. The aim is to find the optimal redundancy so as within limited budget and system weight the maximum system availability is obtained while the total cost is minimized. Since the bi-objective mathematical formulation of the problem is shown to be strongly NP-hard, a controlled elitism non-dominated ranked genetic algorithm (CE-NRGA) is developed to find the Pareto solutions of the problem at hand. Besides, since there is no benchmark available in the literature, a non-dominated sorting genetic algorithm (NSGA-II) is utilized to validate the results obtained. To improve the performance of the adopted algorithms, a multi-objective version of the Taguchi method is used to tune the parameters of the algorithms. Finally, several numerical examples are generated to evaluate the efficiency of the algorithms for which a variety of multi-objective metrics is employed to compare the results.

Mining High Utility Itemsets with Discount Strategies

Mining High Utility Itemsets with Discount Strategies

Hotel discount strategies on consumer responses: the role of involvement

Purpose – This paper aims to examine the impact of hotel discount strategies on consumers’ emotional and behavioral responses in the presence of differential levels of involvement in discount acquisition. Design/methodology/approach – Discount strategies and the high- and low-involvement variables were fully cross-examined, yielding a 2 × 2 factorial quasi experimental design. In all, 120 surveys were collected, and multivariate analysis of variance was used for data analysis. Findings – The results suggest that fenced discounts that require consumers to accept restrictions to receive a discount generated more positive emotion and stronger behavioral intention. Moreover, an interaction effect was found between consumer’s involvement and discounts on emotional and behavioral responses toward discount-acquiring experience. Highly involved consumers resulted in more positive emotional and stronger behavioral responses (e.g. pride, gratitude, word-of-mouth and retention) from obtaining a fenced discount that requires consumers’ efforts or sacrifices. On contrary, consumers with low involvement tend to appreciate more of a fixed discount given to anyone without restrictions. Practical implications – Hotels should implement a fenced discount when they design discounts targeting at high-involvement consumers. For low-involvement consumers, a fixed discount appears to generate more positive emotion and stronger behavioral intention. Originality/value – The study enhances the theoretical understanding of consumers’ emotional and behavioral responses toward discount-acquiring experience with different levels of involvement.

Wholesale price rebate vs. capacity expansion: The optimal strategy for seasonal products in a supply chain

We consider a supply chain in which one manufacturer sells a seasonal product to the end market through a retailer. Faced with uncertain market demand and limited capacity, the manufacturer can maximize its profits by adopting one of two strategies, namely, wholesale price rebate or capacity expansion. In the former, the manufacturer provides the retailer with a discount for accepting early delivery in an earlier period. In the latter, the production capacity of the manufacturer in the second period can be raised so that production is delayed until in the period close to the selling season to avoid holding costs. Our research shows that the best strategy for the manufacturer is determined by three driving forces: the unit cost of holding inventory for the manufacturer, the unit cost of holding inventory for the retailer, and the unit cost of capacity expansion. When the single period capacity is low, adopting the capacity expansion strategy dominates as both parties can improve their profits compared to the wholesale price rebate strategy. When the single period capacity is high, on the other hand, the equilibrium outcome is the wholesale price rebate strategy.

Analysis on the Beijing-Shanghai High-Speed Railway Ticket Discount Strategy

In June 2012, the beijing-shanghai high-speed railway began time-phased preferential policies on parts of the high-speed trains' seats. By studying the data from questionnaire survey in the Beijing South Railway Station, Shanghai Hongqiao Station, and on T109 & T110 train, this article put forwards some discount schemes to meet the demand of passengers, and uses revenue model to provide reasonable discount suggestion.

Reviewing and piloting methods for decreasing discount rates; someone, somewhere in time

There has been substantial debate on the need for decreasing discounting for monetary and health gains in economic evaluations. Next to the discussion on differential discounting, a way to identify the need for such discounting strategies is through eliciting the time preferences for monetary and health outcomes. In this article, the authors investigate the perceived time preference for money and health gains through a pilot survey on Dutch university students using methods on functional forms previously suggested. Formal objectives of the study were to review such existing methods and to pilot them on a convenience sample using a questionnaire designed for this specific purpose. Indeed, a negative relation between the time of delay and the variance of the discounting rate for all models was observed. This study was intended as a pilot for a large-scale population-based investigation using the findings from this pilot on wording of the questionnaire, interpretation, scope and analytic framework.

Time perspective, emotional intelligence and discounting of delayed awards

Although the tendency to delay gratification is by definition the core feature of twoincreasingly popular—within the scope of individual differences at least—constructs: emotional intelligence (EI) and time perspective (TP), the role of the latter two in its development has never been investigated before. Moreover, none of existing research reports consider mutual relationships between EI and TP. Our research investigated relationships between TP, EI and the rate of discounting of delayed awards, understood as one of the forms of gratification delay. We also applied a new method of assessing balanced time perspective—the Deviation from the Balanced Time Perspective (DBTP). 126 university students participated in the study. The results obtained suggest the existence of several important connections between TP and EI and moderate impact of DBTP on the process of discounting. Future studies on temporal orientation could be enriched by utilizing this integrative measure of balanced time perspective (the DBTP coefficient) and by partitioning award delays into stages when analyzing temporal discounting strategies.

Optimizing managed care rebate strategy to improve returns

Optimizing managed care rebate strategy to improve returns

Optimizing managed care rebate strategy to improve returns

In this age of spiraling health-care costs, it is imperative for pharmaceutical companies to price drugs so that patients can afford them as well as to manage costs to meet margin pressure. Pharmaceutical companies are now spending an average of 20 per cent of annual revenues in rebates to managed care companies – which affects both the price the consumer pays, as well as pharmaceutical profit margins. Hence, it is important for pharmaceutical companies to optimize rebate spend and strategy. This article describes a study that was performed at the request of a pharmaceutical company, to help it devise and quantify a price discounting strategy. In this study, the relationship between patient co-pay and a drug's market share was quantified. This quantification led to a managed care organization (MCO) segmentation scheme that provided insight into the performance of the drug, in terms of market share, within individual MCOs. Segmenting the MCOs on the basis of drug share performance and co-pay helped unearth...

Optimal Pricing and Rebate Strategies in a Two‐Level Supply Chain

For many product categories, manufacturers and retailers often offer rebates to stimulate sales. Due to certain adverse effects, however, some manufacturers and retailers are contemplating the elimination of their rebate programs. This paper sheds light on the debate about the value of rebate programs by presenting a model for evaluating the conditions under which a firm should offer rebates in a competitive environment. Specifically, we consider a two‐level supply chain comprising one manufacturer and one retailer. Each firm makes three decisions: the regular (wholesale or retail) price, whether or not to offer rebates, and the rebate value should the firm decide to launch a rebate program. We determine the equilibrium of a vertical competition game between the manufacturer (leader) and the retailer (follower), and we provide insights about how competition affects the conditions under which a firm should offer rebates in equilibrium.

Newsboy Problem with Two Objectives, Fuzzy Costs and Total Discount Strategy

Newsboy Problem with Two Objectives, Fuzzy Costs and Total Discount Strategy

An agent based modeling approach for determining optimal price-rebate schemes

Delayed incentives in the form of cash mail-in rebates have become very popular. While some research has been conducted on consumer perception and behavior toward rebates, little research has been undertaken with respect to a seller’s optimal rebate strategy. We use an agent-based modeling approach for jointly determining optimal price and rebate value. This approach has been previously applied to pricing and can capture some aspects of the problem which are difficult to analyze using traditional mathematical modeling. The model indicates that rebates are much more profitable when their values are jointly determined with price. In addition, the profitability of rebates at a given time depends on past consumers’ experience with rebates and that consumers’ memory of their past rebate redemption behavior plays an important role in determining the profitability of rebates. Also, the analysis shows that agent-based modeling may provide an alternative method for analyzing problems in which interactions between participants in the systems, i.e. consumers, sellers, and regulating agencies, are important in determining the overall behavior of the system.

Discounting the Difficult: How High Math-Identified Women Respond to Stereotype Threat

In this study, we examined how math identity moderates women's response to gender-related stereotypes in the domain of mathematics. Male and female college students with varying degrees of math identification took a challenging math test with a gender-related stereotype either activated (i.e., stereotype threat) or nullified. Consistent with previous research, women performed worse than men in the stereotype threat condition, but equal to men in the stereotype nullification condition when performance was adjusted for math SAT scores. Moreover, when faced with stereotype threat, high math-identified women discounted the validity of the test more than did less math-identified women or men in general. We discuss potential benefits and drawbacks of a discounting strategy for women who are highly identified with math.

Humans can adopt optimal discounting strategy under real-time constraints.

Critical to our many daily choices between larger delayed rewards, and smaller more immediate rewards, are the shape and the steepness of the function that discounts rewards with time. Although research in artificial intelligence favors exponential discounting in uncertain environments, studies with humans and animals have consistently shown hyperbolic discounting. We investigated how humans perform in a reward decision task with temporal constraints, in which each choice affects the time remaining for later trials, and in which the delays vary at each trial. We demonstrated that most of our subjects adopted exponential discounting in this experiment. Further, we confirmed analytically that exponential discounting, with a decay rate comparable to that used by our subjects, maximized the total reward gain in our task. Our results suggest that the particular shape and steepness of temporal discounting is determined by the task that the subject is facing, and question the notion of hyperbolic reward discounting as a universal principle.

Humans can adopt optimal discounting strategy under real-time constraints

Humans can adopt optimal discounting strategy under real-time constraints

Combining advice: the weight of a dissenting opinion in the consensus

AbstractWe present two studies that evaluate how people combine advice and how they respond to outlying opinions. In a preliminary study, we found that individuals use discounting strategies when they encounter an extreme opinion in a small sample of opinions taken only once (a one‐shot advice‐taking situation). The main study examines the influence of outlying opinions (which may or may not be accurate) within a learning paradigm with feedback. This study shows that it is easy to reinforce a discounting strategy (with feedback) whereas it is more difficult to counteract this default strategy. In the discussion we consider cognitive, statistical, and strategic justifications for discounting opinions, from both theoretical and practical points of view. Copyright © 2004 John Wiley & Sons, Ltd.

Unasked-for support and unsolicited advice: age and the quality of social experience.

The present study (N = 122) examined whether older adults (M = 79 years) differed from younger age groups (Ms = 25 and 45 years) in their experience of 35 situations of unsolicited support selected from 7 content areas (e.g., health, cognition, finances, life management). Examined were reported occurrence, affective quality, interpretation, and strategies used when support was unwelcome. At all ages, unasked-for support was regarded as more unpleasant than pleasant, primarily because it implied incompetence. Unexpectedly, compared with the younger adults, older adults reported less occurrence overall (with some variations by content area) but the same level of unpleasant affect. Cognitive and social-relational factors that are age related (e.g., the use of active discounting strategies) played a role in reported occurrence and affective appraisal and may determine whether unsolicited support has positive or negative outcomes.

Discount strategies for one-time-only sales

Inventory clearing sales, especially in the case of highly competitive, established products, are sometimes accompanied by temporary discounts in the purchase price, to encourage customers to place orders larger than usual. This paper presents a generalized model of this temporary price discount problem in which explicit recognition is given to widely used variations (i) in the length of the grace period within which prospective buyers may place the discounted order; (ii) in the size of the order needed to qualify for the discounts; and (iii) in the portion of the order eligible for the discount.