Dynamics of consumers' dissatisfaction due to stock-outs

Shelby E. Koos, Nazrul I Shaikh

Research output: Contribution to journalArticle

Abstract

In this paper, we quantify the effect that product stock-outs led consumer dissatisfactions have on consumer behavior. We (a) develop and calibrate a mathematical model that can track how an individual consumer's dissatisfaction evolves over time on account of one or more experiences of stock-outs during shopping trips to a retail store, (b) link the measure of dissatisfaction to the probabilities of various consumer actions such as substitution, postponement, and abandonment, and (c) aggregate the individual level models to yield a measure of the backorder costs of various products for the retailer. The study yields a practical solution that retailers could use to determine how a consumer is likely to respond to a stock-out situation and hence be proactive in relationship management. It also helps retailers in assortment planning.

Original languageEnglish (US)
Pages (from-to)461-471
Number of pages11
JournalInternational Journal of Production Economics
Volume208
DOIs
StatePublished - Feb 1 2019
Externally publishedYes

Keywords

  • Consumer behavior
  • Consumer dissatisfaction
  • Reference point effect
  • Retail assortment planning
  • Stock-outs

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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