Pricing and Revenue Management for Seasonal Demand

Off-peak discounting can be an effective revenue management tactic for owners of production or transportation capacity in any supply chain facing seasonal peak d and, because changing capacity over time is expensive. This tactic increases profits for the owner of assets, decreases the price paid by a fraction of customers, and also brings in potentially new customers during the off-peak discount period. 

5 PRICING AND REVENUE MANAGEMENT FOR BULK AND SPOT CONTRACTS 

In most instances, owners of supply chain assets prefer to fulfill all demand that arises from bulk sales and try to serve small customers only if any assets are left over. In contrast, a firm 

If demand is normally distributed, with a mean of /tt and a standard deviation of a, the optimal amount, Q, of the asset purchased in bulk is obtained as 

The amount of bulk purchase increases if either the spot maiket price inCTeases or the bulk price decreases. Evaluation of bulk contract purchases is illustrated in Example 16-6 (see worksheet Example 16-6). 

---