Joint Determination Of Inventory And Sales Effort Under Online Reverse Auctions

Online auctions have an important position in e-commerce, mainly including online forward auctions and online reverse auctions. This paper mainly studies the online reverse auctions, and discusses the joint decisions on inventory and sales effort management under online reverse auctions.We study the joint decisions on sales effort and inventory of retailers under online reverse auctions for the single-period and multi-period settings, respectively.On the reverse auctions, it is assumed that the retailer determines a procurement contract specifying a payment for possible purchase quantity. Then, bidding invi-tation is issued and the supplier with the lowest marginal production cost wins.The supplier has the right to make the decision about the quantity to produce and deliver. On the other hand, the retailer uses sales effort to influence the demand of consumers, so as to maximize her expected profits. For single-period setting,we investigate the retailer's profit function under three different kinds of demand forms (additive demand, multiplicative demand, the general demand), it is shown that the retailer's expected profit (excluding purchasing cost) is a concave function of the purchased quantity, leading to an optimal order quantity and sales effort level. Analytical expressions for purchase quantity and expected profit under nor-mal demand distribution are obtained, and numerical results are also given. For multi-period setting, according to whether considering the fixed ordering cost, we firstly establish the joint control models of inventory and sales effort respectively under reverse auctions with stochastic demand; Then, we find the optimal strate-gies by using stochastic dynamic programming.