Journal article
Advance selling in the presence of valuation uncertainty and demand correlation
Omega (Oxford), v 138, 103407
Jan 2026
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We consider a problem where a seller presells a product and the demands in the advance and spot periods are stochastic and correlated. There are two types of consumers, informed and uninformed consumers, in the market, depending on their arrival time. Informed consumers who arrive in the advance period are uncertain about their valuation of the product, and the uncertainty will be resolved until the spot period. Considering the correlation between the two types of consumers, by offering a proper advance strategy, the seller can use the advance order information to update his forecast for the spot-period demand and make better inventory decisions accordingly. In this paper, we consider two preorder strategies: the preorder strategy with a price guarantee and the one without a price guarantee. We investigate the seller’s optimal advance and spot pricing decisions under the two strategies and investigate the impact of consumers’ valuation uncertainty on the seller’s decisions. We also conduct numerical experiments to show that the seller should offer a price guarantee when the informed demand uncertainty is large.
•There are two types of consumers in the market, informed and uninformed consumers, depending on their arrival time.•Considering two preorder strategies: the preorder strategy with a price guarantee and the one without a price guarantee, we investigate the seller’s optimal advance and spot pricing decisions and the impact of consumers’ valuation uncertainty.•The seller tends to set higher advance and spot prices if more high-value consumers are available under the preorder strategy without a price guarantee.•The seller could offer a lower advance price with a larger portion of high-value consumers when a price guarantee is offered.
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Details
- Title
- Advance selling in the presence of valuation uncertainty and demand correlation
- Creators
- Jianhong Li - Huazhong University of Science and TechnologyChen Hu - Tsinghua UniversityMingzhuo Dai - Huazhong University of Science and TechnologyWenjing Shen - Drexel UniversityZhiyuan Chen - Wuhan University
- Publication Details
- Omega (Oxford), v 138, 103407
- Publisher
- Elsevier
- Number of pages
- 13
- Grant note
- National Key R&D Program of China: 2023YFB330 8300, 2023YFB3308301 Special Fund for Major Interdisciplinary Projects of Independent Innovation: 2025ZDJC002, 5003300177 National Natural Science Foundation of China: 72471180
National Key R&D Program of China under Grant No. 2023YFB330 8300, No. 2023YFB3308301; Special Fund for Major Interdisciplinary Projects of Independent Innovation under Grant No. 2025ZDJC002, No. 5003300177; National Natural Science Foundation of China (General Program) under Grant No. 72471180.
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Decision Sciences (and Management Information Systems)
- Web of Science ID
- WOS:001553415700001
- Scopus ID
- 2-s2.0-105013384542
- Other Identifier
- 991022080093904721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Management
- Operations Research & Management Science