Transcript Pricing and revenue optimization

Pricing and revenue
optimization
Course outline
• Basic price optimization, examples
•
•
•
•
Looks at pricing the product depending on the cost and demand structure
Looks at different demand curves and their implications
Practical outcome: imputed elasticity as a sanity check for current pricing
Whether to maximize revenue or total contribution, Solver
• Price differentiation, examples
• Segment market and find optimal prices, Solver
• Different prices for the internet channel and the retail store
• Considers arbitrage, that can occur between the markets, Solver
• Optimal pricing with cannibalization, Solver
• Optimal pricing and finding the best possible segmentation – at which price to
segment the market, Solver
Course outline
• Pricing with constrained supply, examples
• Pricing with a capacity constraint, Solver
• Market segmentation and supply constraints, Solver
• Variable pricing, Solver
• Revenue management – mostly for airlines, hotels, car rentals
• Capacity allocation, examples
•
•
•
•
Setting booking limits
Decision tree approaches
Different assumptions and their implications
The use of heuristics
• Network management, examples
• Network linear programming problems, Solver
• Overbooking
Course outline
• Markdown management, examples
• Pricing decision is taken in subsequent steps, Solver
• Deterministic problem, problem with uncertainty
• Estimating markdown sensitivity with the least squares method, Solver
• Customized pricing, B2B
• Customer acceptance
Grading the course
• 50% of the grade comes from writing a recap of a revenue
management case study
• 50% of the grade is due to an assignment solved during the exam, the
use of all materials permitted, plenty of time to solve – at least 4
hours
Course textbooks