Track 7
Dynamic Pricing & Markdowns
Pricing under uncertainty and time pressure: the newsvendor problem, Gallego-van Ryzin dynamic pricing, advertising allocation, and seasonal markdown optimization.
Fashion Season Manager
Simulate multi-period markdown schedules, compare optimal versus naive discounting, and observe how inventory depletion interacts with price trajectories.
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Topics
Pricing Under Demand Uncertainty
The price-setting newsvendor problem
Jointly optimize price and order quantity when demand is uncertain, explore how the critical fractile shifts under price-dependent demand, and compare stochastic and deterministic solutions.
Real-Time Dynamic Pricing
Pricing under stochastic demand and finite inventory
Explore the Gallego and van Ryzin model of dynamic pricing. Observe the characteristic sawtooth pattern as prices rise with inventory depletion and drop on replenishment.
Advertising vs Price Cuts
The Dorfman-Steiner condition
Analyze the optimal allocation between advertising spend and price reductions using the Dorfman-Steiner condition, and explore when promotions dominate brand investment.
Fashion Season Manager
Optimizing price reductions as inventory dwindles
Simulate multi-period markdown schedules, compare optimal versus naive discounting, and observe how inventory depletion interacts with price trajectories.