Basic Price Optimization
Basic Price Optimization
We discuss
Basic elements of pricing and revenue optimization
(PRO)
How basic PRO problem can be formulated as an
optimization problem
Goal (objective function) of the optimization
problem is to maximi
IE 576
Sample Problems for Exam II
1. What is price differentiation?
2. What are the real-world limitations of price differentiation? Name two of them and explain
briefly.
3. Name of three of the tactics for price differentiation and explain them briefly.
Modeling
Detailed
Operations
Chapter 5
Last revision August 20, 2009
Simulation with Arena, 5th ed.
Chapter 5 Modeling Detailed Operations
Slide 1 of 51
What Well Do .
Model 5-1: Simple call center
Lower-level modeling, Advanced Process panel
Three-way de
Homework 2 solution
Consider the following continuously operating job shop. Interarrival times of jobs are distributed as follows:
Time between
arrivals (hours)
0
1
2
3
probability
0.23
0.37
0.28
0.12
Processing times for jobs are normally distributed wit
A Guided Tour
Through Arena
Chapter 3
Last revision July 21, 2009
Simulation with Arena, 5th ed.
Chapter 3 A Guided Tour Through Arena
Slide 1 of 70
What Well Do .
Start Arena
Load, explore, run an existing model
Basically same as hand simulation in Chapt
Modeling Basic
Operations and
Inputs
Chapter 4
Last revision June 21, 2009
Simulation with Arena, 5th ed.
Chapter 4 Modeling Basic Operations and Inputs
Slide 1 of 68
What Well Do .
Model 4-1: Electronic assembly/test system
Model 4-2: Enhanced electronic
IE 325 Simulation Modeling and Analysis
Quiz #1
Time allowed: 25 minutes
Name:
_Solution_
Question 1: Call center [10 points]
Consider a call center of an electronics supplier with two technical support personnel, Bill and
Joe. Bill provides first level t
IE 325
Introduction to Simulation
What is Simulation?
Simulation is:
the process of designing a model of a real system and
conducting experiments with this model
for the purpose either of understanding the behavior of the system or
evaluating various stra
IE 325
Fundamental Concepts
Simple Processing System
Recall our Simple Processing System.
Single-server
system (1 drill press machine).
Machine
(Server)
Arriving
Blank Parts
7
6
5
Queue (FIFO)
4
Departing
Finished Parts
Part in Service
2
Simple Processin
IE 325
HAND SIMULATION
2
Hand Simulation
In hand simulation, a simulation table is used to record the successive
system snapshots as time advances.
A snapshot at a given time t includes:
the system state at time t,
a list of all activities currently in
IE 325 Simulation
Recitation 3
1. Trucks arrive with EXPO(9) interarrival times (all times are in minutes) to an unloaded area that has
three docks. The unload times are TRIA(25,28,30), TRIA(23,26,28) and TRIA(22,25,27) for docks 1, 2
and 3, respectively.
IE 576 Pricing and Revenue Management
Summer 2016
Course Description
Learning
Outcomes
The aim of this course is to provide a comprehensive introduction to both the theory and the
practice of revenue management and pricing. Course objectives are: (i) to f
Capacity Allocation
Introduction
Determining how many seats (or hotel rooms) to
allow low-fare customers to book when there is
the possibility of future high-fare demand
Important because most of the airliners have
based their revenue management strateg
Random Numbers
A random number is a randomly generated quantity between 0 and 1
These numbers should be distributed uniformly between 0 and 1
Prob of falling in an interval (a,b): 0<a<b<1 is b-a
Generated numbers must be statistically independent
Random v
Chapter 3
General Principles
More on Concepts in DES
System: A collection of entities (people, machines, etc)
that interact together over time to accomplish one or
more goals
Model: An abstract representation of a system,
containing structural, logical an
HW 2 IE 325 Due to March 20, 2014 11:59 pm. Please submit to the TA via email. 100 pts
total
From the discrete event system simulation textbook
Chapter 2
Do exercise 1 page 96. (The question starts with Consider the following continuously operating
job sh
Homework 2 solution
Consider the following continuously opera ting job shop. Intera rriva l times of jobs a re distributed a s follows:
Time between
a rriva ls (hours)
0
1
2
3
proba bility
0.23
0.37
0.28
0.12
Processing times for jobs a re norma lly distr
IE 576
Pricing and Revenue Management
Introduction
This course is about how to make better pricing
and revenue management decisions in order to
increase the profitability of companies
Pricing decisions are faced by almost every
company:
Commonplace
Co
IE 576
Sample Problems for Exam I
1. What might be the reason that a seller sells a product below its cost? Give a real life
example.
2. What is a perfectly competitive market? Under which conditions, a market is called a
perfect market?
3. How are the pr
Markdown Management
Introduction
Waiting for the Sale is a time-honored strategy for
savvy shoppers
Budget-minded customers know that they can
save by waiting
The longer they wait, the more they save
Many items will be marked down by 70% or more
by th
Review
Calculus & Probability & Optimization
Calculus Review
Calculus
The equation
lim f ( x) c
x a
means that as x gets closer to a (but not equal to
a), the value of f(x) gets arbitrarily close to c.
A function f(x) is continuous at point a if
lim f (
Price Differentiation
Price Differentiation
One of the most fundamental concepts in PRO
Practice of a seller charging different prices to
different customers either for
exactly the same good
slightly different versions of the same good
To extract add
Pricing with Constrained
Supply
Nature of Supply Constraints
Most sellers face supply constraints at least some
of the time, such as in between replenishment
times
There are many cases in which a seller needs to
consider the constrained nature of supply
Simulation Course lectures
Chapter 1
If you demonstrate the
performance you did in PM or
DA, half of you will fail this
course
Introduction
Simulation: imitation of the operation of a real-world
process or system over time
Involves generation of an artifi