Knowledge Assisted Dynamic Pricing for Large-Scale Retailers
It is very difficult for large-scale retailers to price thousands of items dynamically reflecting all constraints and policies. To solve this problem, we adopt a combined model approach that contingently selects appropriate pricing models and integrates them. The three proposed models are cost-plus,...
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| Main Authors: | , |
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2000
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| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/sis_research/1157 http://dx.doi.org/10.1016/S0167-9236(99)00095-0 |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | It is very difficult for large-scale retailers to price thousands of items dynamically reflecting all constraints and policies. To solve this problem, we adopt a combined model approach that contingently selects appropriate pricing models and integrates them. The three proposed models are cost-plus, competitor-referenced, and demand-driven models. Since each model can be converted to a set of interval and point constraints, we have developed price point determination rules, which find a price point from the weighted interval and point constraints. A prototype system, Knowledge-Assisted Pricing Assistant (KAPA) is developed with this idea. According to our experiment involving 76 cases with 54 pricing experts, KAPA performed consistently, with human experts, about 89.5% accurate. This approach can be a very effective pricing scheme in the electronic marketing era. |
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