EOQ Model For Off-price Merchandise With Related Demand Under Different Waiting Will Of Customers

Under fierce market competition, in order to attract more new and old customers, a special promotion strategy of off-price merchandise is adopted by many supermarkets and marketplaces. In the pricing and ordering of off-price merchandise,sellers make decisions only by experience, lacking of scientific theories as guideline, which leads to profit shrinkage or inventory backlog and brings economic loss to enterprises. Therefore,researching in pricing and ordering strategy of off-price merchandise with demand related and different waiting will of customers has important practical significance for improving the level of customer service and enterprise economic benefits.Considering that off-price merchandise is allowed to be stockout and the waiting will of customers is related to selling price and waiting time respectively during out of stock,two kinds of different backlogging rate have been presented, and an economic ordering quantity model of off-price merchandise with demand related and different waiting will of customers has been generated. Considering the price of the off-price merchandise as exogenous variable and decision variable, the existent condition of the unique optimal solution and correlative management inspirations discussed. The effect of key parameters on pricing, ordering policy and average profit of distributors is analyzed by numerical simulation. It shows that instock time has a floor value and stockout time has a ceiling value when the price of off-price merchandise satisfies a certain condition; the price of off-price merchandise is a decreasing function of the proportion of high-income customers when demand related factor is greater, but there exits a floor value; the pricing of off-price merchandise should be lower and the time of stockout should be extended appropriately when the proportion of low-income customers and the deteriorating rate are larger; the pricing of off-price merchandise should be lower and the time of stockout should be shortened when the difference between selling price and purchase price of the related merchandise, demand related factor and the expiration date of the off-price merchandise are larger; the pricing of off-price merchandise should be higher and the time of stockout should be shortened when price and time sensitivity factor are larger; it is allowed that the price of off-price merchandise closes to even less than its purchase price when the difference between selling price and purchase price of the related merchandise is greater than a threshold value.Making a further consideration of different waiting will of customers, customers aredivided into price preference group, time preference group and price-time comprehensive influence group. A corresponding economic order quantity model is built, and the effect of the proportion of time preference customers on pricing, ordering strategy and average profit is analyzed. It shows that the pricing of off-price merchandise should be lower and instock and stockout time should be extended appropriately when the proportion of high-income customers is constant and the proportion of low-income customers is larger; the pricing of off-price merchandise should be lower and instock and stockout time should be shortened appropriately when the proportion of low-income customers is constant(more than half), the proportion of high-income customers is greater.