New: Crowdvoting the Timing of New Product Introduction
Launching new products into the marketplace is a complex and risky endeavor that companies must continuously undertake. As a result, it is not uncommon to witness major rms discontinuing a product shortly after its introduction. In this paper, we consider a seller who has the ability to first test the market and gather demand information before deciding whether or not to launch a new product. In particular, we consider the case in which the seller sets up an online voting system that potential customers can use to provide feedback about their willingness to buy the new product. This voting system has the potential of offering a win-win situation whereby a consumer who votes hopes to influence the seller's final assortment, while at the same time these votes and their pace benefit the seller as they provide valuable information to better forecast demand. We investigate the optimal design of such a crowdvoting system and its implications on the seller's commercialization strategy.
REVISION: Intertemporal Pricing under Minimax Regret
We consider the pricing problem faced by a monopolist who sells a product to a population of consumers over a finite time horizon. Customers are heterogeneous along two dimensions: (i) willingness-to-pay for the product and (ii) arrival time during the selling season. We assume that the seller knows only the support of the customers' valuations and do not make any other distributional assumptions about customers' willingness-to-pay or arrival times. We consider a robust formulation of the seller's pricing problem which is based on the minimization of her worst-case regret, a framework first proposed by Bergemann and Schlag (2008) in the context of static pricing. We consider two distinct cases of customers' purchasing behavior: myopic and strategic customers. For both of these cases, we characterize optimal price paths. For myopic customers, the regret is determined by the price at a critical time. Depending on the problem parameters, this critical time will be either the end of ...
New: Online Auction and List Price Revenue Management
We analyze a revenue management problem in which a seller facing a Poisson arriving stream of customers operates an online multiunit auction. Customers have an alternative list price channel where to get the product from. We consider two variants of this problem: In the first one, the list price is an external channel run by another firm. In the second variant, the seller manages simultaneously both the auction and the list price channels.
Each consumer, trying to maximize his own surplus, ...
An Overview of Pricing Models for Revenue Management
In this paper, we examine the research and results of dynamic pricing policies and their relation to Revenue Management. The survey is based on a generic Revenue Management problem in which a perishable and non-renewable set of resources satisfy stochastic price-sensitive demand processes over a finite period of time. In this class of problems, the owner (or the seller) of these resources uses them to produce and offer a menu of final products to the end customers. Within this context, we ...
Optimal Control and Hedging of Operations in the Presence of Financial Markets
We consider the problem of dynamically hedging the profits of a corporation when these profits are correlated with returns in the financial markets. In particular, we consider the general problem of simultaneously optimizing over both the operating policy and the hedging strategy of the corporation. We discuss how different informational assumptions give rise to different types of hedging and solution techniques. Finally, we solve some problems commonly encountered in operations management to ...
New: Insider Trading With Stochastic Valuation
This paper studies a model of strategic trading with asymmetric information of an asset whose value follows a Brownian motion. An insider continuously observes a signal that tracks the evolution of the asset fundamental value. At a random time a public announcement reveals the current value of the asset to all the traders. The equilibrium has two regimes separated by an endogenously determined time T. In [0,T), the insider gradually transfers her information to the market and the market's ...
Dynamic Pricing for Non-Perishable Products with Demand Learning
A retailer is endowed with a finite inventory of a non-perishable product. Demand for this product is driven by a price-sensitive Poisson process that depends on an unknown parameter, theta; a proxy for the market size. If theta is high then the retailer can take advantage of a large market charging premium prices, but if theta is small then price markdowns can be applied to encourage sales. The retailer has a prior belief on the value of theta which he updates as time and available ...