A free gift card alternative to price discounts in the newsvendor problem

  title={A free gift card alternative to price discounts in the newsvendor problem},
  author={M. Khouja and SungJune Park and J. Zhou},
  journal={Omega-international Journal of Management Science},
  • M. Khouja, SungJune Park, J. Zhou
  • Published 2013
  • Business
  • Omega-international Journal of Management Science
  • In this paper, we develop a newsvendor model in which the retailer gives “free” gift cards to consumers who purchase a regularly priced product at the end of the selling season instead of discounting the product. The model is developed for a market with patient consumers. We derive the sufficient optimality condition for the retailer's stocking level in the first period and the optimal gift card value in the second period. We also investigate the conditions under which giving gift cards results… CONTINUE READING
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