Feldmann to give pricing talk Monday

Gunnar Feldmann, an associate research engineer in the Department of Industrial and Systems Engineering at Texas A&M University, will give a seminar Monday (March 1) at 3 p.m. in Room 203 of the Zachry Engineering Center on campus.Feldmann's talk, "Explaining Stickiness in Prices of Non-Perishable Goods Under Dynamic Pricing Policies," is part of the Department of Industrial and Systems Engineering's seminar series, sponsored by Parsons.Abstract Dynamic pricing policies are expanding beyond their initial application within service industries. This expansion, however, is associated to several research challenges, because price setting decisions are contingent upon additional costs. These costs range from physical and managerial cost involved in changing price to indirect cost from changes in customer behavior due to changing prices. The first cost, also referred to as menu cost, is incurred every time a price change decision is made. The second cost is related to Prospect Theory, which suggests, that consumers perceive a price drop higher than a similar price increase. This effects customer buying behavior and ultimately holding or lost sale costs.The research presented in this talk focuses on these two costs by analyzing their impact on the price setting policy. Specifically, we develop a dynamic pricing policy for non-perishable products. In this policy, menu cost and reference price theory, are incorporated into the pricing sequence in order to determining when and by how much to change price. Then, from the developed pricing policy we show, analytically and numerically, that a dynamic pricing policy converges to a high-low pricing policy if menu cost and reference theory are considered. This result confirms previous analysis, based on empirical sales data obtained from non-perishable products, that dynamic pricing policies converge to a high-low pricing strategy under menu cost.Biography Feldmann is currently a TEES associate research engineer. He received his Ph.D. in industrial engineering and operations research from the University of Massachusetts-Amherst in 2008. Before that he graduated from the University of Applied Sciences Kiel (Germany) with a master's degree in mechanical engineering with the focus on production and production economics. His research interest are revenue management for nonperishable products and multi-agent systems.Submitted by Katherine Edwards, kedwards@tamu.edu