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Dynamic Pricing For Heterogeneous Time Sensitive Customers
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Book Synopsis Dynamic Pricing for Heterogeneous Time-Sensitive Customers by : Negin Golrezaei
Download or read book Dynamic Pricing for Heterogeneous Time-Sensitive Customers written by Negin Golrezaei and published by . This book was released on 2018 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: A core problem in the area of revenue management is pricing goods in the presence of strategic customers. We study this problem when customers are heterogeneous with respect to their initial valuations for the item and their time sensitivities, i.e., the customers differ in both their initial valuations and the rates at which their initial valuation decreases with delay in purchase. We characterize the optimal mechanism for selling durable goods in such environments and show that delayed allocation and dynamic pricing can be effective screening tools for maximizing firm profit. We also investigate the impact of production and holding costs on the optimal mechanism.
Book Synopsis A Dynamic Pricing Strategy for a 3PL Provider with Heterogeneous Customers by : Ray Zhang
Download or read book A Dynamic Pricing Strategy for a 3PL Provider with Heterogeneous Customers written by Ray Zhang and published by . This book was released on 2016 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the pricing problem for a third-party-logistics (3PL) provider that provides warehousing and transportation services. When customers arrive at the 3PL provider, they specify the delivery dates for their freight, and before the specified delivery dates, their freight is stocked in the 3PL provider's warehouse. We propose a dynamic pricing strategy (DPS) and develop a stochastic-nonlinear-programming (SNLP) model which computes the optimal freight rates for different delivery dates incorporating the 3PL provider's current holding cost and available transportation capacity for each route. As customers are heterogeneous in their valuations and price sensitivities for delivery dates, and the distributions of the customers' delivery date preferences are unknown to the 3PL provider, we modify the standard multinomial logit (MNL) function to predict customer choices. Through a simulation experiment, we show that the proposed MNL function can be a good replacement for the mixed MNL function when the mixed MNL function is not applicable. Through simulation we also compare the proposed DPS with a static pricing strategy. We show that with our DPS both the 3PL provider and its customers are better off, and the 3PL provider has different investment incentives for increasing transportation capacity. Our results can be also applied in similar settings that feature holding costs, limited production capacity and delivery-date-sensitive customers.
Book Synopsis Strategic Timing and Dynamic Pricing for Online Resource Allocation by : Vibhanshu Abhishek
Download or read book Strategic Timing and Dynamic Pricing for Online Resource Allocation written by Vibhanshu Abhishek and published by . This book was released on 2020 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper optimizes dynamic pricing and real-time resource allocation policies for a platform facing non- transferable capacity, stochastic demand-capacity imbalances, and strategic customers with heterogeneous price- and time-sensitivities. We characterize the optimal mechanism, which specifies a dynamic menu of prices and allocations. Service timing and pricing are used strategically to: (i) dynamically manage demand- capacity imbalances, and (ii) provide discriminated service levels. The balance between these two objectives depends on customer heterogeneity and customers' time-sensitivities. The optimal policy may feature strategic idleness (deliberately rejecting incoming requests for discrimination), late service prioritization (clearing the queue of delayed customers) and deliberate late service rejection (focusing on incoming demand by rationing capacity for delayed customers). Surprisingly, the price charged to time-sensitive customers is not increasing with demand -- high demand may trigger lower prices.By dynamically adjusting a menu of prices and service levels, the optimal mechanism increases profits significantly, as compared to dynamic pricing and static screening benchmarks. We also suggest a less information-intensive mechanism that is history-independent but fine-tunes the menu with incoming demand; this easier-to-implement mechanism yields close-to-optimal outcomes.
Book Synopsis Operationalizing Dynamic Pricing Models by : Steffen Christ
Download or read book Operationalizing Dynamic Pricing Models written by Steffen Christ and published by Springer Science & Business Media. This book was released on 2011-04-02 with total page 363 pages. Available in PDF, EPUB and Kindle. Book excerpt: Steffen Christ shows how theoretic optimization models can be operationalized by employing self-learning strategies to construct relevant input variables, such as latent demand and customer price sensitivity.
Book Synopsis Revenue Management and Pricing Analytics by : Guillermo Gallego
Download or read book Revenue Management and Pricing Analytics written by Guillermo Gallego and published by Springer. This book was released on 2019-08-14 with total page 336 pages. Available in PDF, EPUB and Kindle. Book excerpt: “There is no strategic investment that has a higher return than investing in good pricing, and the text by Gallego and Topaloghu provides the best technical treatment of pricing strategy and tactics available.” Preston McAfee, the J. Stanley Johnson Professor, California Institute of Technology and Chief Economist and Corp VP, Microsoft. “The book by Gallego and Topaloglu provides a fresh, up-to-date and in depth treatment of revenue management and pricing. It fills an important gap as it covers not only traditional revenue management topics also new and important topics such as revenue management under customer choice as well as pricing under competition and online learning. The book can be used for different audiences that range from advanced undergraduate students to masters and PhD students. It provides an in-depth treatment covering recent state of the art topics in an interesting and innovative way. I highly recommend it." Professor Georgia Perakis, the William F. Pounds Professor of Operations Research and Operations Management at the Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts. “This book is an important and timely addition to the pricing analytics literature by two authors who have made major contributions to the field. It covers traditional revenue management as well as assortment optimization and dynamic pricing. The comprehensive treatment of choice models in each application is particularly welcome. It is mathematically rigorous but accessible to students at the advanced undergraduate or graduate levels with a rich set of exercises at the end of each chapter. This book is highly recommended for Masters or PhD level courses on the topic and is a necessity for researchers with an interest in the field.” Robert L. Phillips, Director of Pricing Research at Amazon “At last, a serious and comprehensive treatment of modern revenue management and assortment optimization integrated with choice modeling. In this book, Gallego and Topaloglu provide the underlying model derivations together with a wide range of applications and examples; all of these facets will better equip students for handling real-world problems. For mathematically inclined researchers and practitioners, it will doubtless prove to be thought-provoking and an invaluable reference.” Richard Ratliff, Research Scientist at Sabre “This book, written by two of the leading researchers in the area, brings together in one place most of the recent research on revenue management and pricing analytics. New industries (ride sharing, cloud computing, restaurants) and new developments in the airline and hotel industries make this book very timely and relevant, and will serve as a critical reference for researchers.” Professor Kalyan Talluri, the Munjal Chair in Global Business and Operations, Imperial College, London, UK.
Book Synopsis Advances in Production Management Systems. Production Management Systems for Volatile, Uncertain, Complex, and Ambiguous Environments by : Matthias Thürer
Download or read book Advances in Production Management Systems. Production Management Systems for Volatile, Uncertain, Complex, and Ambiguous Environments written by Matthias Thürer and published by Springer Nature. This book was released on with total page 488 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Rational Queueing by : Refael Hassin
Download or read book Rational Queueing written by Refael Hassin and published by CRC Press. This book was released on 2016-03-23 with total page 378 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understand the Strategic Behavior in Queueing SystemsRational Queueing provides one of the first unified accounts of the dynamic aspects involved in the strategic behavior in queues. It explores the performance of queueing systems where multiple agents, such as customers, servers, and central managers, all act but often in a noncooperative manner.T
Book Synopsis Dynamic Pricing with Heterogeneous Patience Levels by : Ilan Lobel
Download or read book Dynamic Pricing with Heterogeneous Patience Levels written by Ilan Lobel and published by . This book was released on 2017 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider the problem of dynamic pricing in the presence of patient consumers. We call a consumer patient if she is willing to wait a certain number of periods for a lower price and will purchase as soon as the price is equal to or below her valuation. We allow for arbitrary joint distributions of patience levels and valuations. We propose an efficient dynamic programming algorithm for finding optimal pricing policies. The dynamic program requires a larger state space than its counterpart for a strategic consumers model. We find numerically that optimal policies can take the form of incomplete cyclic policies, combining features of both nested sales policies and decreasing cyclic policies.
Book Synopsis Behavioral Consequences of Dynamic Pricing by : David Prakash
Download or read book Behavioral Consequences of Dynamic Pricing written by David Prakash and published by BoD – Books on Demand. This book was released on 2022-07-28 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: Digital technologies are driving the application of dynamic pricing. Today, this pricing strategy is used not only for perishable products such as flights or hotel rooms, but for almost any product or service category. With dynamic pricing, retailers frequently adjust their prices over time to respond to factors such as demand, their supply and that of competitors, or the time of sale. Additionally, dynamic pricing allows retailers to take advantage of a large share of consumers' willingness to pay while avoiding losses from unsold products. Ultimately, this can lead to an increase in revenue and profit. However, the application of dynamic pricing comes with great challenges. In addition to the technological implementation, companies have to take into account that dynamic pricing can cause complex and unintended behavioral consequences on the consumer side. The key objective of this dissertation is to provide a deeper understanding of the impact of dynamic pricing on consumer behavior. To this end, this dissertation presents insights from four perspectives. First, how reference prices as a critical component in purchase decisions are operationalized. Second, how customers search for products priced dynamically, differentiated by business and private customers, as well as by different devices used for the search. Third, whether and how dynamic pricing influences the impact of internal reference prices on purchase decisions. Finally, this dissertation demonstrates that consumers perceive price changes as personalized in different purchase contexts, leading to reduced perceptions of fairness and undesirable behavioral consequences.
Download or read book Sharing Economy written by Ming Hu and published by Springer. This book was released on 2019-01-11 with total page 528 pages. Available in PDF, EPUB and Kindle. Book excerpt: This edited book examines the challenges and opportunities arising from today’s sharing economy from an operations management perspective. Individual chapter authors present state-of-the-art research that examines the general impact of sharing economy on production and consumption; the intermediary role of a sharing platform; crowdsourcing management; and context-based operational problems. Sharing economy refers to a market model that enables and facilitates the sharing of access to goods and services. For example, Uber allows riders to share a car. Airbnb allows homeowners to share their extra rooms with renters. Groupon crowdsources demands, enabling customers to share the benefit of discounted goods and services, whereas Kickstarter crowdsources funds, enabling backers to fund a project jointly. Unlike the classic supply chain settings in which a firm makes inventory and supply decisions, in sharing economy, supply is crowdsourced and can be modulated by a platform. The matching-supply-with-demand process in a sharing economy requires novel perspectives and tools to address challenges and identify opportunities. The book is comprised of 20 chapters that are divided into four parts. The first part explores the general impact of sharing economy on the production, consumption, and society. The second part explores the intermediary role of a sharing platform that matches crowdsourced supply with demand. The third part investigates the crowdsourcing management on a sharing platform, and the fourth part is dedicated to context-based operational problems of popular sharing economy applications. “While sharing economy is becoming omnipresence, the operations management (OM) research community has begun to explore and examine different business models in the transportation, healthcare, financial, accommodation, and sourcing sectors. This book presents a collection of the state-of-the-art research work conducted by a group of world-leading OM researchers in this area. Not only does this book cover a wide range of business models arising from the sharing economy, but it also showcases different modeling frameworks and research methods that cannot be missed. Ultimately, this book is a tour de force – informative and insightful!” Christopher S. Tang Distinguished Professor and Edward Carter Chair in Business Administration UCLA Anderson School of Management
Book Synopsis Cyclic Pricing with Strategic Waiting Customers and Population Dynamics by : Zheyi Li
Download or read book Cyclic Pricing with Strategic Waiting Customers and Population Dynamics written by Zheyi Li and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider continuous-time dynamic pricing in the presence of strategic waiting customers and their population dynamics. The firm makes the pricing decision with a finite menu of prices each time. Customers arrive at a constant rate with heterogeneous valuations. Customers purchase if the current price is less than their corresponding valuations. The remaining customers are strategic: they may leave or wait for future clearance sales, and the leaving rate can be population-contingent. The firm has the option to offer a clearance price to attract all waiting customers to purchase. We build a continuous-time model by exploiting impulse control. For a two-price menu, the optimal pricing policy is a cyclic pricing strategy that starts with a regular price and ends at a clearance price. For a multi-price menu, in contrast to the existing literature, we show that the optimal dynamic pricing policy can be either a textit{pump and dump cyclic} or textit{generalized pump and dump cyclic} strategy. Which strategy is optimal is determined by the sign of the effective marginal leaving rate. We provide analytical solutions for the cycle length and the optimal pricing path. Our results provide new explanations for the popularity of periodic clearance sales with penetration pricing and skimming pricing in practice. Our findings also provide guidelines on carrying out dynamic pricing with the customer leaving behaviors. Numerically, we show that ignoring cyclic pricing in the presence of strategic waiting customers can lead to a significant profit loss.
Book Synopsis Real-Time Dynamic Pricing for Revenue Management with Reusable Resources, Advance Reservation, and Deterministic Service Time Requirements by : Yanzhe (Murray) Lei
Download or read book Real-Time Dynamic Pricing for Revenue Management with Reusable Resources, Advance Reservation, and Deterministic Service Time Requirements written by Yanzhe (Murray) Lei and published by . This book was released on 2018 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider a dynamic pricing problem in a system with reusable resources. Customers arrive randomly over time, according to a specified non-stationary rate, and each customer requests a service that uses a combination of different types of resources for a deterministic duration of time. The resources are reusable in the sense that they can be immediately used to serve a new customer upon the completion of the previous service. Our objective is to construct a dynamic pricing control that maximizes expected total revenues. This is a fundamental problem faced by firms in many industries. We develop real-time heuristic controls based on the solution of the deterministic relaxation of the original stochastic problem and show that they are near-optimal in the regime of large demand and large resource capacity. We further show that our results can be extended to a more general setting with heterogeneous service time and advance reservation.
Book Synopsis Innovative Priority Mechanisms in Service Operations by : Shiliang Cui
Download or read book Innovative Priority Mechanisms in Service Operations written by Shiliang Cui and published by Springer Nature. This book was released on 2023-06-23 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book introduces the most advanced and recent theoretical research on innovative priority mechanisms in service settings. It covers cutting-edge topics on service innovations such as line-sitting, service-position-trading, referral priority programs, queue-scalping, distance-based priority, and dynamic priority policy. It also contains a variety of practical examples and applications which help managers to make better decisions and to develop a coherent business strategy. This book appeals to a wide readership, from academics and Ph.D. students who are interested in priority mechanisms, to service managers and researchers in the service industry. This is an open access book.
Book Synopsis Intertemporal Price Discrimination Via Reference Price Effects by : Zizhuo Wang
Download or read book Intertemporal Price Discrimination Via Reference Price Effects written by Zizhuo Wang and published by . This book was released on 2015 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider the dynamic pricing problem a monopolistic seller faces when customers arrive in heterogeneous time periods and their purchase decisions are affected by reference prices formed from their past purchase experiences. We illustrate that a new form of price discrimination opportunity exists in such situations, where the seller's optimal pricing strategy is a cyclic one, even when the customers are loss-neutral and their demand functions are identical. This result differs from those in prior studies where the optimal price paths are shown to be asymptotically constant when customer arrival times are homogeneous or when there are no reference price effects, thus is unique due to the interaction between the heterogeneous arrivals and the reference price effects. We also provide the length of the cycle when the demand function is linear. In this era where customer information becomes easier accessible, our results suggest the seller consider this new dimension of price discrimination in conjunction with the old ones, in order to take advantage of the full power of customer data.
Book Synopsis Inter-Temporal Pricing with Strategic Customer Behavior by : Xuanming Su
Download or read book Inter-Temporal Pricing with Strategic Customer Behavior written by Xuanming Su and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a model of dynamic pricing with endogenous inter-temporal demand. In the model, there is a monopolist who sells a finite inventory over a finite time horizon. The seller adjusts prices dynamically in order to maximize revenue. Customers arrive continually over the duration of the selling season. At each point in time, customers may purchase the product at current prices, remain in the market at a cost in order to purchase later, or exit, and they wish to maximize individual utility. The customer population is heterogeneous along two dimensions: they may have different valuations for the product and different degrees of patience (waiting costs). We demonstrate that heterogeneity in both valuation and patience is important because they jointly determine the structure of optimal pricing policies. In particular, when high-value customers are proportionately less patient, markdown pricing policies are effective because the high-value customers would buy early at high prices while the low-value customers are willing to wait (i.e. they are not lost). On the other hand, when the high-value customers are more patient than the low-value customers, prices should increase over time in order to discourage inefficient waiting. Contrary to intuition, we find that strategic waiting by customers may sometimes benefit the seller: when low-value customers wait, they compete for availability with high-value customers and thus increase their willingness to pay. Our results also shed light on how the composition of the customer population affects optimal revenue, consumer surplus, and social welfare. Finally, we consider the long run problem of selecting the optimal initial stocking quantity.
Book Synopsis Revenue Management for Manufacturing Companies by : Florian Defregger
Download or read book Revenue Management for Manufacturing Companies written by Florian Defregger and published by Springer. This book was released on 2019-01-10 with total page 155 pages. Available in PDF, EPUB and Kindle. Book excerpt: Revenue Management has proven successful in a number of service industries. Starting out in the airlines industry in the 1970s, Revenue Management spread to tourism sectors such as hotels and cruise ships, but also to TV advertising and other industries. Revenue Management for the manufacturing sector is a relatively new concept which is explored in this book. In order to test if there is a potential for Revenue Management in the manufacturing sector, a survey was conducted and sent to a large number of manufacturing companies in the paper, steel and aluminium industries. The results show that Revenue Management is already partly implemented in these industries, but has further greater potential for bottom line improvement in these industries. The book continues with a number of mathematical decision models and heuristics for several application scenarios. The numerical results of the models indicate that manufacturing companies should seriously consider thinking about implementing a Revenue Management system in order to enhance profits significantly.
Book Synopsis The Econometrics of Dynamic Pricing in a Mid-Atlantic Experiment by : Ahmad Faruqui
Download or read book The Econometrics of Dynamic Pricing in a Mid-Atlantic Experiment written by Ahmad Faruqui and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Baltimore Gas & Electric Company (BGE) undertook a dynamic pricing experiment to test customer price responsiveness to different dynamic pricing options. The pilot ran during the summers of 2008 and 2009 and was called the Smart Energy Pricing (SEP) Pilot. In 2008, it tested two types of dynamic pricing tariffs: critical peak pricing (CPP) and peak time rebate (PTR) tariffs. Some thousand customers who randomly placed on these tariffs and some of them were paired with one of two enabling technologies, a device known as the Energy Orb and a switch for cycling central air conditioners. The usage of a randomly chosen control group of customers was also monitored during the same time period. In 2009, the pilot only tested the PTR tariff. In this paper, we estimate a well-known demand model on the hourly consumption, pricing and weather data that was compiled in the SEP pilot. We derive substitution and daily price elasticities and predictive equations for estimating the magnitude of demand response under a variety of dynamic prices. We also test for the persistence of impacts across the two summers. We also report average peak demand reduction for each of the treatment cells in the SEP pilot and compare the findings with those reported from earlier pilots.
