Pricing and Allocation of Retail Space with One RFID Enabled Supplier and One Non-RFID Enabled Supplier
International Journal of Revenue Management, Vol. 3, No.1 pp. 37-55, 2009
24 Pages Posted: 18 Aug 2008 Last revised: 2 Jul 2014
Date Written: February 20, 2008
We consider a retailer who has two suppliers: one who is RFID enabled and another who is not. Assuming vendor managed inventory (VMI), we address the problem of allocation and pricing of the retail shelf-space. Modeling the problem as a Stackelberg game where the retailer is the leader, we observe that RFID technology provides a competitive advantage for the RFID enabled supplier. Further, we observe that high product substitutability, high demand uncertainty, low tag prices, and low restocking costs result in a more favorable environment for the RFID enabled supplier.
Keywords: shelf-space pricing and allocation, technologically different suppliers, radio frequency identificantion, vendor managed inventory
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