Supply Chain
Supply Chain Management
Chapter 15 Pricing and Revenue Management in the Supply Chain Lecturer: Wilmer Jorge
© 2007 Pearson Education 15-1
Outline
The Role of Revenue Management in the Supply Chain Revenue Management for Multiple Customer Segments Revenue Management for Perishable Assets Revenue Management for Seasonable Demand Revenue Management for Bulk and Spot Customers Using Revenue Management in Practice Summary of Learning Objectives
© 2007 Pearson Education 15-2
The Role of Pricing and Revenue Management in a Supply Chain
We can increase supply chain profits by altering inventories and capacity to change available supply. Pricing is an important lever to increase supply chain profits by better matching supply and demand. Revenue management is the use of pricing to increase the profit generated from a limited supply of supply chain assets. SC assets: Capacity (production, transportation and storage) and inventory.
© 2007 Pearson Education 15-3
The Role of Pricing and Revenue Management in a Supply Chain
Firms should first use pricing to achieve some balance between supply and demand and only then invest in or eliminate assets. A trucking company owns 10 trucks. One approach is to set a fixed price for its services. Using revenue management the firm could the following:
- Charge a lower price to customers willing to commit their orders far in advance and a higher price to customers looking for transportation capacity at the last minute
© 2007 Pearson Education 15-4
The Role of Pricing and Revenue Management in a Supply Chain
- Another approach is to charge a lower price to customer with long-term contracts and a higher price to customers looking to purchase capacity at the last minute. - A third approach is to charge a higher price during periods of high demand and lower prices during periods of low demand.
A strategy that adjust prices based on product availability, customer demand, and remaining duration of the
Chapter 15 Pricing and Revenue Management in the Supply Chain Lecturer: Wilmer Jorge
© 2007 Pearson Education 15-1
Outline
The Role of Revenue Management in the Supply Chain Revenue Management for Multiple Customer Segments Revenue Management for Perishable Assets Revenue Management for Seasonable Demand Revenue Management for Bulk and Spot Customers Using Revenue Management in Practice Summary of Learning Objectives
© 2007 Pearson Education 15-2
The Role of Pricing and Revenue Management in a Supply Chain
We can increase supply chain profits by altering inventories and capacity to change available supply. Pricing is an important lever to increase supply chain profits by better matching supply and demand. Revenue management is the use of pricing to increase the profit generated from a limited supply of supply chain assets. SC assets: Capacity (production, transportation and storage) and inventory.
© 2007 Pearson Education 15-3
The Role of Pricing and Revenue Management in a Supply Chain
Firms should first use pricing to achieve some balance between supply and demand and only then invest in or eliminate assets. A trucking company owns 10 trucks. One approach is to set a fixed price for its services. Using revenue management the firm could the following:
- Charge a lower price to customers willing to commit their orders far in advance and a higher price to customers looking for transportation capacity at the last minute
© 2007 Pearson Education 15-4
The Role of Pricing and Revenue Management in a Supply Chain
- Another approach is to charge a lower price to customer with long-term contracts and a higher price to customers looking to purchase capacity at the last minute. - A third approach is to charge a higher price during periods of high demand and lower prices during periods of low demand.
A strategy that adjust prices based on product availability, customer demand, and remaining duration of the