Advance Selling with Part Prepayment and Consumer Returns

Table 1

Parameters and decision variables.

Notation	Interpretation
	Superscript j denotes the retailer’s low, middle and high advance selling price strategy, respectively, .
	Subscript t denotes the two periods, t=1, 2.
	Consumer i’s utility of purchasing the product in period t, .
	Consumer i’s valuation of the product, .
	Ex-ante product information perceived by consumers, .
	Consumers’ sensitivity to the part-prepayment scheme, .
	Proportion of payment by consumers in the advance period, .
	Advance selling price of the product in the advance period.
	Spot selling price of the product in the spot selling period, .
	Residual consumption value of the product after trial, .
	A consumer’s hassle cost when he chooses to return the product.
	Retailer’s per unit handling cost of consumer returns.
	Demand for the product in each period,  .
	Number of consumer returns in each period, .