Optimal product line pricing for two customer segments with an extension to multi-segment case

Udatta S. Palekar, Govind Daruka, Manmeet Singh

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

In this paper we consider the problem of determining optimal prices for a product line. Items are distinguished by a single attribute which we call quality and which is proportional to the cost of the item. Demand for an item is dependent on the price differential between the item and the next item with higher cost. Customers can be grouped into two segments based on the lowest features acceptable and the maximum acceptable price. We develop an algorithm to determine the optimal pricing to maximize profit. We also consider assortment decisions to add or drop items based on regularity conditions and optimality considerations.

Original languageEnglish (US)
Title of host publicationICORES 2014 - Proceedings of the 3rd International Conference on Operations Research and Enterprise Systems
PublisherSciTePress
Pages311-316
Number of pages6
ISBN (Print)9789897580178
DOIs
StatePublished - 2014
Event3rd International Conference on Operations Research and Enterprise Systems, ICORES 2014 - Angers, Loire Valley, France
Duration: Mar 6 2014Mar 8 2014

Publication series

NameICORES 2014 - Proceedings of the 3rd International Conference on Operations Research and Enterprise Systems

Other

Other3rd International Conference on Operations Research and Enterprise Systems, ICORES 2014
Country/TerritoryFrance
CityAngers, Loire Valley
Period3/6/143/8/14

Keywords

  • Optimization
  • Pricing
  • Product line

ASJC Scopus subject areas

  • Organizational Behavior and Human Resource Management

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