Dynamic pricing

Addressing opportunities for dynamic pricing e g. in relation with inventories... 

Vol. 589 M. Schwind, Dynamic Pricing and Automated Resource Allocation for Information Services Reinforcement Learning and Combinatorial Auctions. XII, 293 pages, 2007. 

The political situation within OPEC member countries is complicated and dynamic. Price shocks caused by political unrest in oil-exporting countries have had severe economic effects on the global economy, including losses in gross domestic product (GDP) and increases in inflation and unemployment. Oil market stability concerns are rooted both in political volatility and infrastructure insecurity. Further uncertainty arises from the entry of new suppliers, especially Russia, into the market and their cooperation, or lack thereof, with OPEC. In terms of supply security, the hub-and-spoke oil transportation system in both importing and exporting countries remains vulnerable to attacks. Some suggest a... 

The dynamic programming modeling concepts presented in this chapter are iUustrated with an example, which is both a multiperiod extension of the single-period newsvendor problem of Section 2 as weU as an example of a dynamic pricing problem. 

Geng, X., and Whinston, A. B. (2000), Dynamic Pricing with Micropayment Using Economic Incentive to Solve Distributed Denial of Service Attack, Center for Research in Electronic Commerce, University of Texas at Austin, Austin, TX. 

The bulk of the T-shirts are shipped to traders in Africa who then create paths to consumers. Tanzania is the largest importer of used clothing from the United States. The exported T-shirts are separated into over thirty different groupings and sold in bulk at prices that are between 0.60 and 0.80 a pound [101]. The implied wholesale price of a T-shirt is thus 0.25, which is less than the price of the raw material used to make the T-shirt. Retailers buy these T-shirts in bulk and separate them into single items that can sell for retail prices between 0.50 and 1.50. The author [101] estimates that 90% of the value of a bale would come from 10% of the items in it. However, at retail, dynamic pricing may be needed based on time of day, market volumes, time of month, and so on to adjust the retail prices to willingness to pay. 

Lin, K.Y., Sibdari, S.Y (2004). Dynamic price competition with discrete customer choices. Working Paper. Retrieved April 7, 2005, from http //www.nps.navy.mil/Faculty/Lin... 

The research community has responded to the E-Business challenge. Despite the infamous dot-com bust in the early 2000 s, scores of research initiatives, workshops, technical papers, and special journal issues have been devoted to the subject. E-Business remains a critical subject not only in the research community, but also in corporate boardrooms. Instead of the revolution that would replace every facet of business, the rise of E-Business might be viewed as the emergence of new economic intermediaries that offer opportunities for innovation. These new intermediaries offer different means to respond to market demands (e.g., Internet vs. traditional channels), to facilitate sourcing, procurement, and price discovery (e.g., electronic auctions), and to develop new mechanisms for coordination and execution (e.g., dynamic pricing, revenue management, and collaborative forecasting). 

Eliashberg, J. and A.P. Jeuland. 1986. The impact of competitive entry in a developing market upon dynamic pricing strategies. Marketing Science, VoL5, 20-36. 

This observation is based on discussions with FreeMarkets, Manugistics, and numerous other dynamic pricing software solution providers. 

Elmaghraby, W. J. and Keskinocak, P. (2003). Dynamic pricing in the presence of inventory considerations Research overview, current practices and future directions. Management Science. Special Issue on E-Business, forthcoming. 

Chatwin, R.E. 2000. Optimal Dynamic Pricing of Perishable Products with Stochastic Demand and a Finite Set of Prices. European Journal of Operational Research 125(1), 149-174. 

Elmaghraby, W., P. Keskinocak. 2002. Dynamic Pricing Research Overview, Current Practices and Future Directions. Working paper, Georgia Institute of Technology, Atlanta, GA. 

Gallego, G., and G. van Ryzin. 1994. Optimal Dynamic Pricing of Inventories with Stochastic Demand over Finite Horizons. Management Science 40(8), 999-1020. 

Gallego, G., G. van Ryzin. 1997. A Multiproduct Dynamic Pricing Problem and its Applications to Network Yield Management. Operations Research 45(1), 24-41. 

Masuda, Y., S. Whang. 1999. Dynamic Pricing for Network Service Equilibrium and Stability. Management Science 45(6), 857-869. 

Zhao, W., YS. Zheng. 2000. Optimal Dynamic Pricing for Perishable Assets with Nonhomogeneous Demand. Management Science 46(3), 375-388. 

Additional dynamic pricing papers that incorporate capacity limits include Biller et al [18] and Kachani and Perakis [73] these are reviewed with papers that consider multiple products in Section 4.1.1. 

Although much of the research in pricing and inventory control has centered around dynamic prices, some has also considered the problem of choosing a fixed or constant price over the lifetime of a product. Typically, this is less motivated in an e-commerce environment, but there may be cases where it is desired, and thus the topic bears mentioning here. 

Alpem and Snower [4] analyze a dynamic pricing and inventory control model with learning, where they assume upper and lower bounds on the initial uncertainty in the price-dependent demand function. They assume that the firm chooses a sequence of price-quantity combinations through time. The firm infers the position of its demand curve by observing its inventory level. 

A second pricing model that is increasingly popular for e-commerce applications is dynamic pricing, where the price of an item may change over time. This may used as a tool to manage variability in supply of product or components, or variability of customer demand, or as a reaction to competitors. 

Research indicates that several companies may dynamically adjust the price of their products over time. Indeed, dynamic pricing is a popular strategy in computer industry. Dell Computer Corp., which is the No. 1 PC maker in the world, is one of the pioneers in this area. By working with the company main suppliers, Dell can forecast prices for each component in its computers several... 

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