Pricing strategies for continuous replenishment perishable goods
Name
57455977-MIT.pdf
Description
Full printable version
Size
2.8 MB
Format
Adobe PDF
Checksum (MD5)
e80dfc59ee375e4a5d99dc6fc85a2287
Author(s)
Driegert, William M. (William Matthew), 1977-
Advisor(s)
Jeremie Gallien.
Date Issued
2003
Publisher
Massachusetts Institute of Technology
Abstract
This thesis investigates the application of Dynamic Pricing strategies at a manufacturer of continuous replenishment perishable goods. I begin with a discussion of Dynamic Pricing models, and select a mixed integer programming formulation as most applicable to the available systems and data of the target company. Cost formulations are built through a detailed analysis of current cost allocations within the company and actual costs when available. Revenue and price elasticity models are built from existing formulations. The continuous functions are then discretized through piece-wise approximations and input into a mixed integer program using production and pricing as the decision variables. The results were not entirely conclusive as sensitivity around the base values, particularly the price elasticity value, can create very different price path solutions. Greater stability is achieved through tightening the price ranges, but the suggested policy of always charging the maximum allowable price is not practical within the company's existing policies. For actual implementation, a much more thorough understanding of the price elasticity mechanism would be required.
Description
Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2003.
Includes bibliographical references (leaves 63-64).
Subjects
Engineering Systems Division.
MIT Department
Massachusetts Institute of Technology. Engineering Systems Division
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