Int. J. of Revenue Management   »   2009 Vol.3, No.1



Title: Pricing and allocation of retail space with one radio frequency identification enabled supplier and one non-RFID enabled supplier


Author: Joseph G. Szmerekovsky, Vera Tilson, Jiang Zhang


Department of Management, Marketing and Finance, NDSU Dept 2420, P.O. Box 6050, Fargo, ND 58108-6050, USA.
William E. Simon Graduate, School of Business Administration, University of Rochester, Rochester, NY 14627, USA.
Department of Management, Marketing and Decision Sciences, School of Business, Adelphi University, Garden City, NY 11530, USA


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.


Keywords: RFID; radio frequency identification; revenue management; shelf space pricing; shelf space allocation; technologically different suppliers; VMI; vendor managed inventory; retail space; shelf space management.


DOI: 10.1504/IJRM.2009.023137


Int. J. of Revenue Management, 2009 Vol.3, No.1, pp.37 - 55


Available online: 11 Feb 2009



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