Pricing and allocation of retail space with one radio frequency identification enabled supplier and one non-RFID enabled supplier
by Joseph G. Szmerekovsky, Vera Tilson, Jiang Zhang
International Journal of Revenue Management (IJRM), Vol. 3, No. 1, 2009

Abstract: We consider a retailer with one radio frequency identification (RFID) enabled supplier and one non-RFID enabled supplier. Assuming vendor managed inventory, we address the problem of allocation and pricing of the retail shelf-space. Using a Stackelberg game where the retailer leads, we observe that the RFID technology provides a competitive advantage for the RFID enabled supplier. Further, high product substitutability, high demand uncertainty, low tag prices, and low restocking costs favour the RFID enabled supplier. As shelf-space is capacitated with large fixed costs and its demand varies over time, shelf-space management addresses many of the same challenges as revenue management.

Online publication date: Wed, 11-Feb-2009

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