design and analysis of simulated consumer choice or allocation experiments an approach based on aggregate data the authors integrate concepts in conjoint analysis and discrete choice theory in econometrics to develop a new approach to the design and analysis of controlled consumer choice or resource allocat

utility covariances and context effects in conjoint mnp models experimental conjoint choice analysis is among the most frequently used methods for measuring and analyzing consumer preferences the data from such experiments have been typically analyzed with the multinomial logit mnl model however there are several problems associated with the standard mnl model because it is based on the assumption that the error terms of the underlying random utilities are independent across alternatives choice sets and subjects the multinomial probit model mnp is well known to alleviate this assumption of independence of the error terms accounting for covariances in utilities in modeling choice experiments with the mnp is important because variation of the coefficients in the choice model may occur due to context effects previous research has shown that subjects utilities for alternatives depend on the choice context that is the particular set of alternatives evaluated simonson and tversky s tradeoff contrast principle describes the effect of the choice context on attribute importance and patterns of choice they distinguish local contrast effects which are caused by the alternatives in the offered set only and background contrast effects which are due to the influence of alternatives previously considered in choice experiments these effects are hypothesized to cause correlations in the utilities of alternatives within and across choice sets respectively the purpose of this study is to develop an mnp model for conjoint choice experiments this model is important for a more detailed study of choice patterns in those experiments in developing the mnp model for conjoint choice experiments several hurdles need to be taken related to the identification of the model and to the prediction of holdout profiles to overcome those problems we propose a random coefficients rc model that assumes a multivariate normal distribution of the regression coefficients with a rank one factor structure on the covariance matrix of these regression coefficients the parameters in this covariance matrix can be used to identify which attributes and levels of attributes are potentional sources of dependencies between the alternatives and choice sets in a conjoint choice experiment we present several versions of this model moreover for each of these models we allow utilities to be either correlated or independent across choice sets the independent probit ip model is used as a benchmark given the dimensionality of the integrations involved in computing the choice probabilities the models are estimated with simulated likelihood where simulations are used to approximate the integrals involved in the choice probabilities we apply and compare the models in two conjoint choice experiments in both applications the random coefficients mnp model that allows choices in different choice sets to be correlated rc displays superior fit and predictive validity compared with all other models we hypothesize that the difference in fit occurs because the rc model accommodates correlations among choice sets that are caused by background contrast effects whereas the model that treats choice sets as independent irc accounts for local contrast effects only the irc model shows superior model fit compared with the ip model but its predictions are worse than those of the ip model we find differences in the importance of local and background contrast effects for choice sets containing different numbers of alternatives the background contrast effect may be stronger for smaller choice sets whereas the local contrast effect may be stronger for bigger choice sets we illustrate the differences in simulated market shares that are obtained from the rc irc and ip models in three hypothetical situations product modification product line extension and the introduction of a me too brand in all of those situations substantially different market shares are predicted by the three models which illustrates the extent to which erroneous predictions may be obtained from the misspecified irc and ip models

returns with wholesale price discount contract in a newsvendor problem abstract we consider a newsvendor problem in a supply chain that consists of a manufacturer and a retailer the manufacturer is the stackelberg leader and the retailer is the follower we examine how the manufacturer can contract a wholesale price only agreement with its retailer that maximizes its profit we also propose a returns policy with a wholesale price discount scheme returns discount contract that can achieve supply chain coordination using the wholesale price only contract as a benchmark we show how the manufacturer sets a discounted wholesale price in a returns discount contract that enhances both profits of the manufacturer and the retailer as well as improves the supply chain efficiency

investigating the effects of store brand introduction on retailer demand and pricing behavior researchers have recently been interested in studying the drivers of store brand success as well as factors that motivate retailers to introduce store brands in this paper we study the effects of the introduction of a store brand into a particular product category specifically we are interested in the effect of store brand introduction on the demand as well as on the supply side on the demand side we investigate the changes in preferences for the national brands and price elasticities in the category on the supply side we study the effects of the new entrant on the interactions between the national brand manufacturers and the retailer introducing the store brand including how these interactions influence the retailer s pricing behavior in doing so we are also able to test whether the observed data are consistent with some of the commonly used assumptions regarding retailer pricing behavior for the demand specification we use a random coefficients logit model that allows for consumer heterogeneity the model parameters are estimated using aggregate data while explicitly accounting for endogeneity in retail prices our empirical results obtained from the oats product category based on store level data from a multistore retail chain indicate that the store brand introduction generates notable changes within the category the store brand introduction coincides with an increase in the retailer s margins for the national brand we find that the preferences for the national brand are relatively unaffected by the introduction of the store brand while consumers are in general more price sensitive in terms of elasticities than they were prior to store brand introduction a statistical test of the differences inmean price elasticities across stores and between the two regimes fails to reject the hypothesis of no change in these elasticities elasticities in specific stores however do increase after the store brand is introduced we also find that there is considerable heterogeneity in the preferences for the store brand on the supply side we test several forms of manufacturer retailer interactions to identify retailer pricing behavior most consistent with the data our results indicate that the data reject several commonly imposed forms of interactions in examining the nature of manufacturer interactions with the retailer we find that the manufacturer of the national brand appears to take a softer stance in its interactions with the retailer subsequent to store brand entry this finding is consistent with academic research and with articles in the popular press which suggest that the store brand enhances the retailer s bargaining ability vis a vis the manufacturers of the national brands we also provide results from a second product category frozen pasta that are largely consistent with those found in the oats category

modeling inertia and variety seeking tendencies in brand choice behavior theories of exploratory behavior suggest that inertia and variety seeking tendencies may coexist within the individual implying that the same individual may exhibit inertia and variety seeking at different times depending on his her choice history past research has not allowed for such within consumer variability in these tendencies the purpose of this study is to present a choice model that allows us to identify such hybrid behavior i e a mixture of inertia and variety seeking and to distinguish hybrid behavior from simpler types of behavior such as pure inertia pure variety seeking and zero order behavior the model is estimated at the household level using panel data for three product classes covering a total of 1069 households the empirical analysis shows that more than half the households analyzed exhibited hybrid behavior rather than simpler types of behavior

an ideal point probabilistic choice model for heterogeneous preferences this paper presents a new ideal point probabilistic choice model unlike the model suggested by cooper and nakanishi cooper l g m nakanishi 1983 two logit models for external analysis of preferences psychometrika48 4 607 619 which attempts to capture choices via a single ideal point the proposed model though based on aggregate data allows for heterogeneity in preferences by estimating a distribution of ideal points the model accounts for substitutability among choice alternatives and alleviates one of the major sources for the violation of the independence from irrelevant alternatives property it is demonstrated that the final form of the model is a multinomial probit with a covariance matrix that depends on the relative position of the choice alternatives an empirical application is provided and the resulting parameters are compared to the distributions of ideal points and attribute weights obtained via linmap at the individual level and via both the logit and probit versions of the model proposed by cooper and nakanishi at the aggregate level

a generalized quantity discount pricing model to increase supplier s profits in this paper the joint problem of ordering and offering price discount by a supplier to his sole major buyer is analyzed the objective is to induce the buyer to alter his order schedule and size so that the supplier can benefit from lower set up ordering and inventory holding costs we generalize the quantity discount pricing model of monahan monahan j p 1984 a quantity discount pricing model to increase vendor profits management sci 30 6 720 726 to 1 explicitly incorporate constraints imposed on the amount of discount that can be offered and 2 relax the implicit assumption of a lot for lot or order for order policy adopted by the supplier an algorithm is developed to solve the supplier s joint ordering and price discount problem

a probabilistic choice model for market segmentation and elasticity structure marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching though the approach is useful it typically ignores the destabilizing

testing predicted choices against observations in probabilistic discrete choice models probabilistic discrete choice models such as multinomial logit models are widely used to predict changes in market shares or total demand resulting from changes in policy variables under management control these models often are evaluated in terms of their ability to predict choices in a holdout sample this paper presents a new test for comparing predicted and observed choices the results of a monte carlo experiment indicate that the new test has good finite sample properties and high power in several circumstances likely to arise frequently in applications

coordinating a decentralized supply chain with customer returns and price dependent stochastic demand using a buyback policy abstract we investigate a decentralized supply chain that consists of a manufacturer and a retailer where the retailer simultaneously determines the retail price and order quantity while experiencing customer returns and price dependent stochastic demand we propose an agreement between the manufacturer and the retailer that includes two buyback prices one for unsold inventory and a second for customer returns and show that this type of easy to implement agreement can achieve perfect supply chain coordination and be a win win for both manufacturer and retailer when a complementary profit sharing agreement is included

a heterogeneous conditional logit model of choice aggregate forecasts using mcfadden s conditional logit model of discrete choice harbor the unrealistic implicit assumption of a random utility distribution that is homogeneous across both alternatives and individuals this article relaxes that assumption a choice model is developed that describes the random utility component as a probability mixture model some numerical results illustrate that the derived model is not constrained by the independence of irrelevant alternatives property an experimental test of visual perceptions demonstrates the potential superiority of the model

supply chain coordination for the joint determination of order quantity and reorder point using credit option abstract decisions regarding order quantity and reorder point are two major challenges in supply chain inventory management in this paper a coordination model of the joint determination of these two decision variables is proposed a decentralized supply chain consisting of one buyer and one supplier in a multi period setting is investigated demand and lead times are uncertain in our model an incentive scheme based on credit option has been developed to encourage the buyer to participate in the coordination model in this model the downstream member has the option of using credit to purchase goods during the credit time subject to its commitment to a jointly agreed order quantity and reorder point the credit time is determined in such a way that the two parties have incentives to participate the proposed incentive scheme can share the benefits of coordination between the two members based on their bargaining power the proposed model shows that the coordination of the reorder point together with order quantity can increase the overall chain profitability as well as each member s profitability

a nested logit model of space and water heat system choice this paper estimates a nested logit model for space heat and water heat choice using data from the 1980 pacific northwest energy survey pnw the estimated structure involves six alternative space heat systems and three alternative water heat fuel types operating and capital costs are predicted for each residence using an energy thermal model to relax the independence of irrelevant alternatives assumption we employ a family of nested logit models we illustrate the two step estimation method and use a lagrange multiplier test for nested logit structure finally we use the estimated models to forecast the market shares of alternative space heat systems under an assumed scenario for the course of relative fuel prices

the choice theory approach to market research this paper surveys economic choice theory stressing developments that permit use of data from psychometric and conjoint experiments to produce market demand forecasts alternatives to the widely used multinomial logit model are summarized and a new method for estimating multinomial probits is described an integration of choice models with attitudinal scaling and perceptual mapping within a latent variable system is described estimation of such systems under either random effects or fixed effects descriptions of heterogeneity across individuals is discussed issues in the use of choice models to describe responses from conjoint experiments are presented new regression diagnostic tests for the consistency of multinomial logit representations are discussed

a classification of literature on determining the lot size under quantity discounts abstract determining a lot size in the presence of either all units or incremental discounts has represented one of major interests of materials managers it is a common practice that the suppliers offer quantity discount to entice the buyers to purchase more and to achieve economies of scale for transportation and processing costs this paper will classify the literature on lot sizing determination under several types of discount schemes and discuss some of the significant literature in this area over two decades also some future research areas have been identified

modeling asymmetric competition the effects of the marketing actions of one brand can be distributed among its competitors market shares in a complex manner this paper presents and illustrates methods for modeling brand competition and brand strategies in markets where competitive effects can be differentially and asymmetrically distributed we discuss the empirical specification parameter estimation and competitive strategy implications of the models proposed price and advertising competition among eleven brands of an australian household product is used to illustrate the application of these procedures

economic purchasing strategies for temporary price discounts abstract the familiar model for determining the optimal stock replenishment strategy for a temporary price reduction is based on the simple eoq this paper extends the logic to a composite eoq model which can be decomposed into a family of hybrid models with broader operational flexibility the composite eoq provides malleability and flexibility to changing operational requirements by disaggregating complexity it approaches the resourcefulness of an expert system with its attendant economies

a quantity discount approach to supply chain coordination abstract quantity discounts provide a practical foundation for inventory coordination in supply chains however typical supply chain participants may encounter difficulties in implementing the coordination policy simply because 1 specified lot size adjustments may deviate from the economic lot sizes and 2 the buying firm may face amplified overstocking risks related to increased order quantities the main objective of this study is to develop a quantity discount model that resolves the practical challenges associated with implementing quantity discount policies for supply chain coordination between a supplier and a buyer the proposed buyer s risk adjustment b ra model allows the supplier to offer discounts that capitalize on the original economic lot sizes and share the buyer s risk of temporary overstocking under uncertain demand the analytical results suggest that the proposed b ra discount approach is a feasible alternative for supply chain coordination under uncertain demand conditions

note comments on a quantity discount pricing model to increase vendor profits monahan monahan j p 1984 a quantity discount pricing model to increase vendor profits management sci june 720 726 adapted the quantity discount model of inventory theory to the problem of determining an optimal quantity discount schedule from a vendor s point of view and opened up an important direction of research however his one item one customer one vendor model is based on several implicit assumptions that must be judged unreasonable monahan must account for the vendor s inventory carrying charges and redefine his variable s2 it is shown that a rational vendor s manufacturing frequency would not be identical to the buyer s ordering frequency if the vendor s manufacturing setup costs are substantially larger than the buyer s ordering costs a numerical example presented in this note also questions the practical usefulness of monahan s model even after its theoretical inaccuracies axe corrected monahan s model may explain discounts that are a fraction of 1 of the price of an item but it fails to explain commonly observed magnitudes of quantity discounts such as 10 of the unit price

models of health plan choice this paper considers alternative approaches to accounting for consumer heterogeneity in econometric models of health plan choice in particular we compare and contrast approaches used by health economists and marketing researchers to explicitly allow for consumer heterogeneity in assessment of plan provider quality and characteristics as a result we are able to identify conditions under which approaches utilized by health economists are preferred over those utilized by marketing researchers and vice versa for example we find that in the absence of data on prior year choice which is often the case of models estimated in the health economics literature it would be valuable to estimate random coefficient models which have not been estimated in such works and in the presence of data on prior year choice which is often the case of models estimated in the marketing literature a model wherein consumer characteristics simply interact with plan specific constants and premium and which has not been estimated in that literature offers better fits than random coefficient semi parametric random coefficient and latent class models which have been previously estimated in that literature the model offers important managerial insights useful for targeting benefits of various plans to different customer segments

market boundaries and product choice illustrating attraction and substitution effects what happens to the share of choices each item receives when the choice set boundaries are extended by adding a new item that is extremely good on one dimension but poor on the others first there is a substitution effect whereby the new item takes choice share mainly from similar items in the set second there is an attraction effect resulting in a general shift of preference toward the added item experimental studies show that choice patterns conflict with current theoretical and common sense ideas about the effect of added alternatives on choice

choice map inferring a product market map from panel data this paper describes choice map a model that infers a product market map from panel data choice map is a stochastic brand choice model a random utility quantal choice model and a multidimensional scaling procedure choice map combines the parsimony of stochastic choice models the rationale of random utility models and the ability of multidimensional scaling procedures to simultaneously infer both brand positions and consumer preferences from preference choice data choice map assumes that consumers have stationary purchase probabilities for the observational period which makes the model best suited to frequently bought mature product categories neither experimental nor survey data are required traditional mapping methods that scale such data may not yield the same structure for low involvement products as will a procedure like choice map that scales behavioral data choice map s descriptive and predictive validity exceeds that of an alternative stochastic brand choice model the dirichlet multinomial for a test data set

a unified approach to identifying estimating and testing demand structures with aggregate scanner data a one to one map between a specific demand structure and a restricted cross elasticity matrix is developed and tested using a random utility model the resulting demand structure can be used to evaluate a firm s ability to differentiate its products and can help determine if demand is characterized by factors that are easy to change similar brands are assumed to share common attributes that are stochastically evaluated by the consumer resulting in a random utility model with correlated errors the map results in more precise cross elasticity estimates and can be used to both identify and test possible structures

revisiting foundations in lot sizing connections between harris crowther monahan and clark abstract while many review articles exist on deterministic lot sizing models used in the context of price and quantity discounts buyer vendor coordination supply chain management and joint economic lot sizing problems they do not convey the impact of important findings which date back to at least 2002 or in hindsight to 1984 as a result many recent articles still model the financial implications of lot sizing decisions without having the assurance that these models would help the firm s involved in maximising the net present value npv this paper therefore reviews these findings while adding also its own contributions as to convey the general importance to lot sizing theory we show that the underlying principles used in the four key articles that have led to a division in modelling approaches are in fact all in line with npv and argue that therefore there should not be these discrepancies that currently persist in the literature we establish the connections between these four strands of the literature using the solution to a simple variation of harris eoq model deriving thereby results from boyaci and gallego 2002 and beullens and janssens 2011 but showing their general applicability to any type of supply chain structure the breath of implications to deterministic lot sizing theory is illustrated using practical examples we present a stochastic version of the model of crowther 1964 which is arguably the least understood and applied model but on the other hand the most important one in realising how these modelling strands can be unified

a multiattribute model of consumer choice during product learning the processes of consumer preference formation during product learning are analyzed a hypothesis about how individuals form attribute expectations is used to derive a dynamic multinomial logit model of individual choice which endogenously recognizes product learning the model and its underlying assumptions are then tested in the context of an interactive grocery store learning game the results support most elements of the proposed model structure an assumption of temporal stationarity in attribute salience however could not be supported approaches to implementation of the model are discussed and implications for marketing management and research in individual choice modeling are addressed

estimating a multinomial probit model of brand choice using the method of simulated moments the multinomial probit model of brand choice is theoretically appealing for marketing applications as it is free from the independence of irrelevant alternatives property of the multinomial logit model however difficulties in estimation have restricted its widespread use in marketing this paper presents an application of the method of simulated moments a new methodology that enables easy estimation of probit models with a large number of alternatives in the choice set we describe the theoretical development of the technique and using pseudo simulated data conduct numerical experiments to compare the method with existing techniques for estimating probit models using the scanner panel data on the purchases of catsup we provide an empirical application of the method of simulated moments to the estimation of the parameters of a multinomial probit model estimating the covariance structure associated with the underlying latent variable probit model enables us to identify broad patterns of similarities across alternatives it also enables us to derive a pairwise similarity matrix across choice alternatives which when input into a multi dimensional scaling routine provides us with a graphical representation of competitive structure in the catsup market for completeness we compare the substantive implications for the effects of marketing variables obtained from the multinomial probit model with those obtained from models in the extant marketing literature

a two stage supply chain coordination mechanism considering price sensitive demand and quantity discounts abstract this paper explores the coordination between a supplier and a buyer within a decentralized supply chain through the use of quantity discounts in a game theoretic model within this model the players face inventory and pricing decisions we propose both cooperative and non cooperative approaches considering that the product traded experiences a price sensitive demand in the first case we study the dynamics of the game from the supplier s side as the leader in the negotiation obtaining a stackelberg equilibrium and then show how the payoff of this player could still improve from this point in the second case a cooperative model is formulated where decisions are taken simultaneously emulating a centralized firm showing the benefits of the cooperation between the players we further formulate a pricing game where the buyer is allowed to set different prices to the final customer as a reaction to the supplier s discount decisions for the latter we investigate the difference between feasibility of implementing a retail discount given a current coordination mechanism and without it finally the implications of transportation costs are analyzed in the quantity discount schedule our findings are illustrated with a numerical example showing the difference in the players payoff in each case and the optimal strategies comparing in each case our results with existing work

coordinating ordering and pricing decisions in a two stage distribution system with price sensitive demand through short term discounting abstract we consider a short term discounting model in which the distributor offers a discounted price for the retailers orders placed at the beginning of its replenishment cycle in a non cooperative distribution system with one distributor and multiple retailers each facing price sensitive demand we examine the value of the price discount strategy as a mechanism for the distributor to coordinate the retailers ordering and pricing decisions under two common types of demand linear demand in price and constant elasticity demand in price our numerical study reveals that in the presence of homogeneous retailers namely retailers with identical demand rates the distributor s profit improvement due to coordination generally decreases as the number of retailers or the inventory holding cost rate increases but increases as price elasticity increases although an increase in the inventory holding cost rate has a negative effect on the distributor s profit it may have a positive effect on the retailers profits we further find that with heterogeneous retailers namely retailers with different demand rates offering a discounted price under linear demand benefits the distributor when both the inventory holding cost rate and the variation in demand are either small or large this cross effect however is absent under constant elasticity demand

modeling multiple sources of heterogeneity in multinomial logit models methodological and managerial issues we offer a framework to specify and estimate various sources of heterogeneity in multinomial logit brand choice models we let each brand specific intercept and each parameter of the explanatory variable vector vary randomly across households in addition we distinguish loyal households from the rest our results suggest that incorporating multiple sources of heterogeneity improves the model fit and suggests higher impact of marketing mix elements on brand choice we highlight the importance of incorporating multiple sources of heterogeneity the model we implement yields valuable managerial insights

designing contracts for a reverse supply chain with strategic recycling behavior of consumers abstract in this paper we propose five typical contracts to coordinate decentralized reverse supply chains with strategic recycling behavior of consumers first a reverse supply chain model with strategic recycling behavior of consumers is developed based on the classical newsvendor problem next after analyzing the wholesale price contract we find that the collection quantity of used products increases with the wholesale price then we develop a two stage price contract and find that under this contract the manufacturer could increase the collection quantity by offering a direct incentive to the collector afterwards using the centralized optimal profit as the benchmark we compare the wholesale price contract with the subsidy contract and the cost pooling contract respectively the results show that the subsidy contract is more beneficial to the manufacturer while the cost pooling contract is helpful to the collector yet both lead to lower transfer prices than the wholesale price contract for reverse supply chains finally we design an indemnity contract and conclude that the collector s maximum performance is achieved only when the transfer price equals to the indemnity the total profit of the reverse supply chain under the indemnity contact is not less than that under the wholesale price contract

the ability of nash s theory of cooperative games to predict the outcomes of buyer seller negotiations a dyad level test this research develops and implements a dyad level procedure for testing whether the outcomes of buyer seller negotiations correspond to settlements prescribed by nash s theory of cooperative games the procedure entails a multivariate statistical test in which some parameters are estimated by simulation while others are provided directly from the assessment of negotiator utility functions by means of conjoint analysis the procedure is applied to an experiment in which subjects participated in a realistic role playing exercise that replicated the purchase of television advertising time results indicate that at the 0 01 significance level 57 8 of the dyads can be rejected as not having achieved nash solutions these results and their implications for marketing practitioners as well as future research are discussed

optimal policies for multi echelon inventory problems with batch ordering in many production distribution systems materials flow from one stage to another in fixed lot sizes for example a retailer orders a full truckload from a manufacturer to qualify for a quantity discount a factory has a material handling system that moves full containers of parts from one production stage to the next in this paper we derive optimal policies for multi stage serial and assembly systems where materials flow in fixed batches the optimal policies have a simple structure and their parameters can be easily determined this research extends the multi echelon inventory theory in several ways it generalizes the clark scarf model by allowing batch transfers of inventories rosling 1989 shows that assembly systems can be interpreted as serial systems under the assumption that there are no setup costs we show that the series interpretation still holds when materials flow in fixed batches which satisfy a certain regularity condition finally veinott 1965 identifies an optimal policy for a single location inventory system with batch ordering this paper generalizes his result to multi echelon settings

semiparametric versus parametric classification models an application to direct marketing in this paper we are concerned with estimation of a classification model using semiparametric and parametric methods benefits and limitations of semiparametric models in general and of manski s maximum score method in particular are discussed the maximum score method yields consistent estimates under very weak distributional assumptions the maximum score method can very easily be used in situations where it is mare serious to make one kind of classification error than another in this paper we use a so called threshold crossing model to discriminate between credit card holders and nonholders the estimated parameters of the logit model differ significantly from the estimates of maximum score given an loss function maximum score performs better than the logit model

derivation of covariance probit elasticities the full covariance probit model is highly regarded due to the flexibility with which it can represent cross brand effects explicit formulae for these cross brand effects for the general n brand case have never appeared in print nor have the direct elasticities for the model this note fills that omission

formal choice models in marketing the paper gives an overview and evaluates the theoretical traditions underlying choice models that are used in marketing in particular the emphasis of this essay is on the underlying assumptions limitations and empirical demands of these choice models four fundamental choice models are used as a basis to analyze this complex field the neoclassical economic theory as extended by lancaster the risk preference theory of choices under uncertainty the strict utility theory and the random utility theory these four choice models and their extensions are compared and contrasted along the three critical steps in the model building process theory generation parameterization and estimation

reply reflections on the cost of simplifying preference models author s reply to comments by johnson johnson r m 1986 commentary marketing sci 5 322 and greenberg greenberg m g 1986 commentary marketing sci 5 320 321 about this paper hagerty m r 1986 the cost of simplifying preference models marketing sci 5 298 319

the use of linear logit models in marketing research the author discusses the use of the linear logit model in marketing research a brief review of the linear logit model focuses on model formulation estimation evaluation and inference procedures

two echelon supply chain coordination through the unified number of annual orders abstract this paper studies the problem of how to coordinate a one supplier multi retailer supply chain by requiring retailers to adopt the unified number of annual orders proposed by the supplier the paper presents two coordination models one considering a small number of retailers the other considering a large number of retailers in the proposed models the supplier views all retailers or some selected retailers if more beneficial in the supply chain as one group then offers a price discount to entice the retailers in this group placing their orders only with the specific number of annual orders a heuristic is developed for each model to let the supplier know which retailers will be selected to implement the common number of annual orders and how to determine the corresponding optimal number of annual replenishments and price discount by using a numerical study we evaluate the benefit of the proposed coordination strategy

to join or not to join group purchasing organization a vendor s decision abstract a group purchasing organization gpo is an entity that utilizes collective buying power to obtain significant discounts from vendors which can be suppliers distributors and manufacturers in the healthcare sector it is reported that about 72 of hospital purchases are settled through gpo contracts this paper seeks to examine two critical questions that vendors face 1 business strategy does partnering with a gpo to offer quantity discounts make strategic sense and if so 2 pricing policy what price will yield optimal maximum profits in such a relationship using a linear quantity discount scheme we find that the size of gpo members strongly influences the vendor s decision to contract or not with the gpo furthermore we show that vendors should price their products close to the reservation prices of the gpo members if the vendors indeed wish to pursue such partnerships

predictive testing of consumer choice models not subject to independence of irrelevant alternatives the probabilistic modeling of the relationship between objective or perceived characteristics of multiattribute alternatives and consumer choice is receiving increased attention in marketing and ot

using discrete choice models with experimental design data to forecast consumer demand for a unique cultural event an approach is developed to forecast participation in unique events with long gestation periods experimental observations of choice are derived for conjoint measurement type multiattribute alternatives that describe possible event configurations the choice data are analyzed by means of discrete choice econometric models a multinomial logit choice model is applied to forecast the choice of attendance at various types of international expositions the empirical work was part of the planning efforts undertaken to investigate the potential demand for an international exposition to be held in eastern australia in conjunction with the australian 1988 bicentennial celebrations

a probit model of choice dynamics there are many products which are repeatedly purchased by consumers in such cases it is likely that choice history that is the sequence of choices made in the past as well as marketing variables affect subsequent choice decisions attempts to model the effects of choice history have been generally based on the inclusion of variables that represent brand loyalty and or variety seeking behavior in this paper we present a model of dynamic choice behavior which is more general and incorporates four characteristics the first characteristic labeled preference reinforcement and preference reduction represents loyalty and variety seeking the second is the short term reluctance of a consumer to move from the current brand inertia or the willingness to move to another brand mobility the third characteristic captures the effect of repetitive consumption the long term effect on inertia and mobility the fourth characteristic incorporates the similarity or dissimilarity of choice alternatives this is important in a dynamic model because choice on the current purchase occasion can be affected by whether a similar or dissimilar alternative was chosen on the previous occasion similarities of alternatives are represented in terms of distances the effect of price on choice behavior is also modeled individual level purchase data from a consumer panel are used to estimate a covariance probit and an independent probit specification of the model from a substantive perspective the model gives interesting insights into the dynamics of choice behavior the model predicts switches better than a benchmark model which incorporates only loyalty in addition it is superior to three benchmark models in overall predictive ability

endogeneity and heterogeneity in a probit demand model estimation using aggregate data two issues that have become increasingly important while estimating the parameters of aggregate demand functions to study firm behavior are theendogeneity of marketing activities typically price andheterogeneity across consumers in the market under consideration ignoring these issues in the estimation of the demand function parameters can lead to biased and inconsistent estimates for the effects of marketing activities endogeneity and heterogeneity have achieved prominence in large measure because of the increasing popularity of logit models to characterize demand functions usingaggregate data the logit model accounts for purchase incidence and brand choice by including a no purchase alternative in the consumer s choice set this allows for category sales to change as a function of the marketing activities of brands in the category there are three issues with using the logit model with the no purchase option to characterize demand when studying competitive interactions among firms 1 the marketing literature dealing with brand choice behavior at the consumer level has found that the iia restriction is not appropriate as each brand in the choice set is more similar to some brands than it is to others 2 studies have found that the purchase incidence decision is distinct from the brand choice decision hence it may not be appropriate to model the no purchase decision as just another alternative in the choice set with the iia restriction holding across all brands and the no purchase option 3 even if the distinction between the purchase incidence and brand choice decisions is accounted for via for example a nested logit specification accounting for the purchase incidence decision with aggregate data requires assumptions for computing the share of the no purchase alternative which is otherwise unobserved in this paper we propose a probit model as an alternative to the logit model to specify the aggregate demand functions of firms competing in oligopoly markets the probit model avoids the iia property that affects the logit model at the individual consumer level furthermore the probit model can naturally account for the distinction between the purchase incidence and brand choice decisions due to the general covariance structure assumed for the utilities of the alternatives we demonstrate how the parameters of the proposed model can be estimated using aggregate time series data from a product market in the estimation we account for the endogeneity of marketing variables as well as for heterogeneity across consumers our results indicate that both endogeneity as well as heterogeneity need to be accounted for even after allowing for a non iia specification at the individual consumer level specific to our data we also find that ignoring endogeneity has a bigger impact on the estimated price elasticities than ignoring the effects of heterogeneity a comparison of the elasticities obtained from the probit model with those from the corresponding logit specification indicates that therange of elasticities obtained from the probit model across brands is larger than that obtained from the logit the results have implications for issues such as firm level pricing in addition to specifying a probit model and providing comparisons with the logit model the paper also addresses the third issue raised above we propose a simple alternative to the purchase incidence brand choice specification by decomposing the demand for a brand into a category demand equation and a conditional brand choice share equation we provide a comparison of results from this specification to those from the specification that includes the no purchase alternative and find that estimated elasticities are sensitive to the specification used we also estimate the demand function parameters using a traditional specification such as the double logarithmic model here we find that the estimated elasticities could be signed in such a manner as to be not useful for firm level pricing decisions one of the key limitations of the proposed model is that while it accounts for the purchase incidence and brand choice decisions of households it does not account for differences across consumers in their purchase quantities the model and analysis are best suited for product categories in which consumers typically make single unit purchases another limitation is more practical in nature while recent advances have been made in computing probit probabilities it could nevertheless be a challenge to do so when the number of alternatives is large

separating the likelihood and timing of bank failure abstract we use a split population survival time model to separate the determinants of bank failure from the factors influencing the survival time of failing banks basic indicators of a bank s condition such as capital troubled assets and net income are important in explaining the timing of bank failure however many of the other variables typically included in bank failure models such as measures of bank liquidity are not associated with the time to failure the results also suggest that the closure of large banks is not delayed relative to the closure of small banks

channel coordination and quantity discounts this paper presents a model for analyzing the impact of joint decision policies on channel coordination in a system consisting of a supplier and a group of homogeneous buyers the joint decision policy characterized by the unit selling price and the order quantity is coordinated through quantity discounts and franchise fees both the annual demand rate and the operating cost including the purchase ordering and inventory holding costs depend on the joint decision policy employed this paper contributes by integrating work addressing quantity discounts on inventory and ordering policies and work focusing on the control mechanism provided by quantity discounts in channel coordination it is shown that the optimal all unit quantity discount policy is equivalent to the optimal incremental quantity discount policy in achieving channel coordination furthermore it is shown that quantity discounts alone are not sufficient to guarantee joint profit maximization the analyses of the general models are illustrated by specific analytical results obtained for a given demand function