Role of Pricing and Revenue Management in a Supply Chain
Role of IT in Pricing and Management and Pricing and Revenue Management in Practice
Pricing and Revenue Management for Perishable Assets
Pricing and Revenue Management for Seasonal Demand and Pricing and Revenue Management for Bulk and Spot Contracts
Pricing & Revenue Management for Multiple Customer Segments
100
What role does revenue management play?
It helps use pricing to increase the profit generated from a limited supply of supply chain assets.
100
What are the seven steps of revenue management
1. Evaluate your market carefully
2. Quantify the benefits of revenue management
3. Implement a forecast process
4. Apply Optimization to obtain the revenue management decision
5. Involve both sales and operations
6. Understand and inform the customer
7. Integrate supply planning with revenue management
100
Any asset that loses value over time is considered what?
Perishable
100
What month do most retailers in the US achieve a significant fraction of their annual sales?
December
100
Demand from a segment paying a lower price, arises _________ than a segment paying a higher price.
Earlier
200
Firms should adjust this first, before shutting down or building up capacity to meet demand
Pricing
200
What is a crucial portion when evaluating your market in revenue management?
Gathering accurate and complete data relating to products offered, prices, competition, and most important, customer behavior.
200
What are 2 revenue management tactics used for perishable assets?
1. Vary price dynamically over time to maximize expected revenue
2. Overbook sales of the asset to account for cancellations
200
What is an effective revenue management tactic when faced with seasonal peaks?
Charge higher price during peak and a lower price during off-peak periods
200
A supplier must limit this for lower price buyers, even if there is sufficient demand?
Capacity
300
Give an example of differential pricing?
Charge less to someone who orders far in advance
300
When is it difficult to forecast?
at a micro level
300
**Double Jeopardy**
Define dynamic pricing?
Tactic of varying price over time
300
How do hotels use differential pricing
They offer lower rates during the weekend to encourage families to use the hotel during that time.
300
This occurs when the capacity reserved for higher price buyers is wasted due to low demand
Spoilage
400
Provide an example of seasonal patterns
Amazon.com offers discounts at non-peak times of the year because their sales follow this.
400
What are the three major areas where Pricing and Revenue Management software had a major impact?
1. Airline Industry
2. Pricing of retail goods in the consumer packaged-goods category (i.e. grocery and drug stores)
3. Fashion goods, particularly clothing
400
Effect differential pricing over time generally _______ the level of product availability for the consumer willing to pay full price and also ____________ total profits for the retailer.
Increases/Increases
400
Owners of supply chain assets prefer to fulfill all demand that arises from _______ sales and try to serve ______ customers only if any assets are left over.
bulk/small
400
What occurs if higher price buyers have to be turned away because the capacity goes to lower price early buyers?
Spill
500
Give an example of a spot market.
Leasing warehouse space, short term for a higher price.
500
What are the major pitfalls in the pricing and revenue management area of IT?
1. Linking the PRM decisions with other areas and systems of the company
2. The ease of installation of the pricing adjustments can be difficult if there is no integration with inventory, distribution, and production systems
500
What are two risks in dynamic pricing?
1. Anticipating price drops
2. People who paid full price feel duped.
500
What problems do most consumers of production, warehousing, and transportation in a supply chain face?
constructing a portfolio of long-term bulk contracts and spot market contracts.
500
What must a company do every time a product is sold to balance differentiated market segments?