Retailer's Strategy Selection Considering Consumers' Anticipated Regret

doi:10.3969/j.issn.1007-7375.2023.01.001

Abstract

Abstract: A two-period model considering stochastic demand is proposed, for evaluating the impact of forward-looking and regret-prone behavior of consumers on the determination of optimal price and inventory. The influence of consumers' anticipated regret on the retailer's optimal decision-making is studied. Besides, two strategies for guiding consumers to buy immediately are analyzed: price commitment and quick response. Results show that, high-price (stockout) regret aggravates (mitigates) strategic waiting behavior, and the retailer should decrease (increase) the price and the inventory. Both price commitment and quick response can alleviate strategic waiting behavior, but the value of the two is oppositely affected by consumers' anticipated regret. Price commitment outperforms quick response only when the replenishment cost is above a certain threshold and consumers' anticipated regret sensitivity is below a certain threshold.

Key words: strategic waiting behavior, high-price regret, stockout regret, price commitment, quick response

CLC Number:

F270

GUAN Zhenzhong, KANG Huaifei. Retailer's Strategy Selection Considering Consumers' Anticipated Regret[J]. Industrial Engineering Journal, 2023, 26(1): 1-7,40.

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