The economics of selection of mail orders

✍ Scribed by Nissan Levin; Jacob Zahavi

• Book ID: 102150164
• Publisher: John Wiley and Sons
• Year: 2001
• Tongue: English
• Weight: 200 KB
• Volume: 15
• Category: Article
• ISSN: 1094-9968
• DOI: 10.1002/dir.1016

✦ Synopsis

We discuss the economics of selection of mail orders involving pricing and inventory considerations. We use a probabilistic approach to account for customer choice uncertainty, and offer an approximate approach to account for time uncertainty and model specification errors. The model makes use of the famous “newsboy” problem from inventory theory to solve for the optimal order quantity. The approach is demonstrated on a real application in the collectible industry involving realistic data.