Applications of flexible pricing in business-to-business electronic commerce
ABSTRACT The increasingly dynamic nature of business-to-business electronic commerce has produced a recent shift away from fixed pricing and toward flexible pricing. Flexible pricing, as defined here, includes both differential pricing, in which different buyers may receive different prices based on expected valuations, and dynamic-pricing mechanisms, such as auctions, where prices and conditions are based on bids by market participants. In this paper we survey ongoing work in flexible pricing in the context of the supply chain, including revenue management, procurement, and supply-chain coordination. We review negotiation mechanisms for procurement, including optimization approaches to the evaluation of complex, multidimensional bids. We also discuss several applications of flexible pricing on the sell side, including pricing strategies for response to requests for quotes, dynamic pricing in a reverse logistics application, and pricing in the emerging area of hosted applications services. We conclude with a discu ssion of future research directions in this rapidly growing area.
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ABSTRACT: A basic premise in the development of yield management has been that the differentiated fare products offered by airlines are targeted to distinct segments of the total demand for air travel in a market, each of which compete for space on a fixed capacity aircraft. Such representations of differential pricing assume that the airline can segment its demand perfectly and without cost to consumers, and further, ignore the dependence of the demand for a given fare product on the price levels and characteristics of the other available fare products. In this paper, we introduce a new generalised cost model of fare product differentiation that incorporates the relationships between available airline fare products as well as the cost incurred by consumers of accepting more restrictions. We extend the model to incorporate the diversion of passengers to lower-priced fare products as a result of their ability to meet the additional restrictions imposed by airlines, and then demonstrate how seat inventory control can be used to induce diverting passengers to sell up to higher-priced fare products by applying booking limits. An example of how the model can be used for joint fare product price level optimisation is presented, along with a numerical example that illustrates the extent to which the conventional model of price discrimination over-estimates passenger demand and, in turn, total airline revenues.Journal of the Operational Research Society 10/1999; 50(11):1085-1097. · 0.99 Impact Factor
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ABSTRACT: Sourcing is a business process of identifying, evaluating, negotiating, and configuring optimal groupings of trading partners into a supply chain network that responds to changing market demands. In this paper, we focus on a crucial step of the sourcing process, namely, the bid evaluation and selection. More specifically, we present a decision analysis system that helps sourcing professionals analyze offers and select suitable ones in reverse auctions and RFQs (Request-For-Quotes). Unlike conventional bid evaluation systems that depend on multi-criteria decision analysis methods to rank offers by score, this system provides a novel interactive visual analysis capability at its core. The system allows the users to effectively explore the information space comprised of the submitted offers, and selectively utilize various analysis facilities in a controlled manner. We demonstrate that the visual interface of the system is an effective communication mechanism that is to add value and meaning, illuminate, simplify, and clarify, and, furthermore, an efficient decision analysis tool that allows buyers to view, explore, navigate, search, compare and classify submitted offers.09/2001;