Student Number 954206016 Author Mei-chun Kuo(³¢¬ü§¡) Author's Email Address firstname.lastname@example.org Statistics This thesis had been viewed 1386 times. Download 591 times. Department Graduate Institute of Industrial Management Year 2007 Semester 2 Degree Master Type of Document Master's Thesis Language English Title Dynamic Pricing with Price-affected Reservation Price Distribution Date of Defense 2008-06-19 Page Count 40 Keyword Dynamic pricing Markdown Reservation price Abstract We propose a structure of price-affected reservation price distribution to solve the pricing problem that price will influence customers¡¦ reservation price distribution during the selling horizon. The structure is introduced to describe how the customers¡¦ reservation price distribution changes by price at each selling period. Two important parameters and will be the determinants of customers¡¦ reservation price distribution that presents the product characteristic and presents the selling channels. Since the sales activity (promotion) is common seen in the market, we take a reverse way back to use a higher price to increase customers¡¦ reservation price for the product in the regular selling time and hold a sales activity at the last selling period with a lower price to increase the demand of the product hoping to cover the loss caused by the higher price in the previous periods to make the total profit be maximized. The structure exists recursive relation of reservation price between two continuous selling periods, and the prices are determined dynamically.
We use the single-cycle model to describe the markdown problem. Three models are then developed to show how the prices change when a markdown is considered. Many observations will be helpful to explain the customers purchasing behaviors and the selling phenomena in market. Product characteristics and the selling strategy will be the important factors in the structure while sellers decide the prices to achieve the profit maximization.
Therefore, the purpose of this paper is not only to solve a markdown problem but also to observe customers¡¦ reservation price distribution changes with the prices we decide to sell. Sensitivity analysis of parameters and the length of the selling horizon influences customers¡¦ reservation price distribution and profit will be conducted.
Table of Content AbstractI
2. Literature review6
2.1. Markdown issues6
2.2. Dynamic pricing7
2.3. Reservation price8
3. Price-affected reservation price distribution9
3.1. Price-affected reservation price distribution9
3.2. Product characteristics ¡V Parameter 14
3.3. Selling channels - Parameter 15
3.4. Profit optimization of price based on price-affected reservation price distribution19
4. Assumptions and Formulations24
4.1. Markdown pricing problem25
4.1.1. Model 1 ¡V Basic model without markdown26
4.1.2 Model 2 ¡V Single markdown26
4.1.3 Model 3 ¡V Multiple markdowns27
4.2. Numerical examples28
5. Sensitivity Analysis30
5.1. Sensitivity Analysis of parameter 30
5.2. Sensitivity Analysis of selling horizon for average profit31
5.3. Sensitivity analysis of parameter A and manufacturing cost34
6. Summary and conclusion38
7. Future research40
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Advisor Fu-Shiang Tseng(´¿´I²»)
954206016.pdf Date of Submission 2008-06-25