Inventory rationing with multiple demand classes: The case of group buying

Web-based group buying is practised in many businesses nowadays. Noting that the group-buying mechanism is often used with traditional selling methods, this paper develops models in which sellers provide customers with a group-buying option and a regular spot-selling option. We prove the optimality of a threshold rationing policy. Our findings help those sellers who offer multiple selling options in designing and implementing an efficient demand and inventory management system. (C) 2012 Elsevier B.V. All rights reserved.