http://repub.eur.nl/res/aut/3491/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/7124/ 2005-11-29T00:00:00Z Recent years have seen advances in research and management practice in the area of pricing, and particularly in dynamic pricing and revenue management. At the same time, researchers and managers have made dramatic improvements in operations and supply chain management. The interactions between pricing and operations/supply chain performance, however, are not as well understood. In this paper, we examine this linkage by developing a deterministic, finite-horizon dynamic programming model that captures a price/demand effect as well as a stockpiling/consumption effect – price and market stockpile influence demand, demand influences consumption, and consumption influences the market stockpile. The decision variable is the unit sales price in each period. Through the market stockpile, pricing decisions in a given period explicitly depend on decisions in prior periods. Traditional operations models typically assume exogenous demand, thereby ignoring some of the market dynamics. Herein, we model endogenous demand, and we develop analytical insights into the nature of optimal prices and promotions. We develop conditions under which the optimal prices converge to a constant. In other words, price promotion is suboptimal. We also analytically and numerically illustrate cases where the optimal prices vary over time. In particular, we show that price dynamics may be driven by both (a) revenue effects, due to nonlinear market responses to prices and/or inventory, and (b) cost effects, due to economies of scale in operations. The paper concludes with a discussion of directions for future research. http://repub.eur.nl/res/pub/11388/ 2004-01-01T00:00:00Z This article provides an overview of several studies on the linkage between pricing and operations and highlights different drivers for dynamic pricing strategies. Revenue management is concerned with pricing a perishable resource in accordance with demand from multiple customer segments so as to maximize revenue or profit. Research in revenue management has been impressive. A 1999 study provide a review of the literature and directions for future research, and a 2003 study present an updated review with a focus on electronic commerce applications. Revenue management has been the driving force behind many attempts to integrate pricing and operations. A 2001 study on Internet sales, generated a number of hypothesis about how consumers will react to dynamic pricing, both on the Internet and in physical stores. This paper explicitly considers the effects of consumer learning, reference price effects and consumer price expectations. Research that integrates pricing with management of lead time and production capacity can be divided into two segments. One integrates pricing concerns into the capacity-procurement decision, which reflects a long time horizon. The other focuses on a shorter time horizon, using pricing to make the best use of available capacity. http://repub.eur.nl/res/pub/1114/ 2003-12-12T00:00:00Z The past decade has seen a virtual explosion of information about customers and their preferences. This information potentially allows companies to increase their revenues, in particular since modern technology enables price changes to be effected at minimal cost. At the same time, companies have taken major strides in understanding and managing the dynamics of the supply chain, both their internal operations and their relationships with supply chain partners. These two developments are narrowly intertwined. Pricing decisions have a direct effect on operations and visa versa. Yet, the systematic integration of operational and marketing insights is in an emerging stage, both in academia and in business practice. This article reviews a number of key linkages between pricing and operations. In particular, it highlights different drivers for dynamic pricing strategies. Through the discussion of key references and related software developments we aim to provide a snapshot into a rich and evolving field.