E-tailer

The most pressing research challenge related to pricing posed by the Internet is development of models to support real-time pricing in an e-commerce environment. In addition to considering available capacity and inventory, such price quotes should also be sensitive to impacts on customers. For instance, a customer who makes a purchase only to find that the price was reduced shortly thereafter may be unhappy and less likely to return in the future. For this reason, some e-tailers provide some measure of price guarantee (e.g., if a lower price is offered within 30 days of purchase the difference will be refunded. 

The sales step is only part of the overall customer experience with an e-tailer. Providing convenient on-line ordering is certainly important, but if the firm doesn t back it up with prompt, reliable delivery of the product or service, the customer is unlikely tp return. For this reason, customer leadtimes are a critical issue in e-commerce systems. 

The Internet has provided customers (both industrial and consumer) with a new way to interact with their supply chain. Electronic commerce has been widely hailed as a revolution that will permanently transform the landscape of customer/supplier relationships. Although the realities of the dot-com bust have tempered the rhetoric used to describe the changes brought forth by electronic commerce, the Internet will continue to serve an important role in business during the 21 century. During the nascent period of electronic commerce, independent e-tailers, funded by a heavy flow of money from venture capitalists, played a dominant role in the development of internet-based sales to end consumers. For many product categories, independent e-tailers continue... 

Proposition 2. There exists a unique pair Q, A ) optimizing the re-tailer s single-period objective function without starting inventory (i.e., unconstrained) ttJ = 7T O), characterized by the following system of... 

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