{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,3,11]],"date-time":"2026-03-11T06:23:35Z","timestamp":1773210215159,"version":"3.50.1"},"reference-count":72,"publisher":"Institute for Operations Research and the Management Sciences (INFORMS)","issue":"4","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["M&amp;SOM"],"published-print":{"date-parts":[[2017,10]]},"abstract":"<jats:p> The presence of strategic customers may force an already financially distressed firm into a death spiral: sensing the firm\u2019s financial difficulty, customers may wait strategically for deep discounts in liquidation sales. In turn, such waiting lowers the firm\u2019s profitability and increases the firm\u2019s bankruptcy risk. Using a two-period model to capture these dynamics, this paper identifies customers' strategic waiting behavior as a source of a firm\u2019s cost of financial distress. We also find that customers' anticipation of bankruptcy can be self-fulfilling: when customers anticipate a high bankruptcy probability, they prefer to delay their purchases, making the firm more likely to go bankrupt than when customers anticipate a low probability of bankruptcy. Such behavior has important operational and financial implications. First, the firm acts more conservatively when facing either more severe financial distress or a large share of strategic customers. As its financial situation deteriorates, the firm lowers inventory alone when financial distress is mild or only a small share of customers are strategic and lowers both inventory and price in the presence of severe financial distress and a large fraction of strategic customers. Under optimal price and inventory decisions, strategic waiting accounts for a large part of the firm\u2019s total cost of financial distress, although a larger proportion of strategic customers may result in a lower probability of bankruptcy. In addition to inventory reduction and (immediate) price discount, we find that a deferred discount, in the form of rebates and\/or store credits for future purchases, can act as an effective mechanism to mitigate strategic waiting. As a contingent price reduction, deferred discounts align the interests of customers and the firm and are most effective when the fraction of strategic customers is high and the firm\u2019s financial distress is at a medium level. <\/jats:p>","DOI":"10.1287\/msom.2017.0634","type":"journal-article","created":{"date-parts":[[2017,9,13]],"date-time":"2017-09-13T14:49:07Z","timestamp":1505314147000},"page":"657-673","source":"Crossref","is-referenced-by-count":16,"title":["When Customers Anticipate Liquidation Sales: Managing Operations Under Financial Distress"],"prefix":"10.1287","volume":"19","author":[{"given":"John R.","family":"Birge","sequence":"first","affiliation":[{"name":"University of Chicago Booth School of Business, Chicago, Illinois 60637"}]},{"given":"Rodney P.","family":"Parker","sequence":"additional","affiliation":[{"name":"Kelley School of Business, Indiana University, Bloomington, Indiana 47405"}]},{"given":"Michelle Xiao","family":"Wu","sequence":"additional","affiliation":[{"name":"Carson College of Business, Washington State University, Pullman, Washington 99163"}]},{"given":"S. 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