Pricing and Revenue
Management in a
Supply Chain
JANNATUL SHEFA
LECTURER
DEPT. OF IPE, MIST
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Introduction
Revenue management is the use of pricing to increase the
supply chain surplus and profit generated from a limited
availability of supply chain assets.
Supply chain assets exist in two forms—capacity and inventory.
Revenue management adjusts the pricing and available supply
of assets and has a significant impact on supply chain
profitability when one or more of the following four conditions
exist:
1. The value of the product varies in different market segments.
2. The product is highly perishable or product wastage occurs.
3. Demand has seasonal and other peaks.
4. The product is sold both in bulk and on the spot market.
Pricing and Revenue Management for
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Multiple Customer Segments
Two fundamental issues, however, must be handled in practice.
First, how can the firm differentiate between the two segments
and structure its pricing to make one segment pay more than
the other?
Second, how can the firm control demand so the lower-paying
segment does not use the entire availability of the asset?
In the presence of multiple segments that can be separated, the
firm must solve the following two problems:
1. What price should it charge for each segment?
2. How should it allocate limited capacity among the segments?
Pricing and Revenue Management for
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Multiple Customer Segments
d = 10,000 - 2,000p
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Thank You!