The Coordination of Pricing and Scheduling Decisions
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Date: 03-20-2007
Start Time:
1:00pm
End Time: 2:00pm
Speaker: Nicholas Hall, The Ohio State University
Location: Mudd 303
ABSTRACT
This paper considers the coordination of pricing and scheduling decisions. We assume knowledge of a deterministic demand function which is nonincreasing in price. Therefore, revenue is also determined by the pricing decision. We consider three alternative measures of scheduling cost: total weighted completion time of jobs, total weight of jobs delivered late to customers, and overall schedule length, respectively. The objective is to maximize the total net profit, i.e. revenue less scheduling cost, resulting from the pricing and scheduling decisions. We develop computationally efficient optimal algorithms for solving the three coordinated pricing and scheduling problems. We show that these problems are formally intractable, thereby proving that much faster algorithms are not possible. We also develop a fully polynomial time approximation scheme for each problem. Managerial insights are obtained from a detailed computational study which compares solutions delivered by (a)~an uncoordinated approach where pricing and scheduling decisions are made independently,(b)~a partially coordinated approach which uses only basic information about scheduling that a marketing department typically knows, (c)~a simple heuristic approach for solving the coordinated problem, and (d)~our optimal algorithm for solving the coordinatedproblem. Our results estimate the value of coordination between pricing and scheduling decisions, and provide tools with which such coordination can easily be achieved.
Joint work with Zhi-Long Chen, University of Maryland.
BIO
Nicholas G. Hall is Professor of Management Sciences in the Fisher College of Business at The Ohio State University. He holds B.A., M.A. degrees in economics from the University of Cambridge, a professional qualification in accounting, and a Ph.D. (1986) from the University of California at Berkeley. His research interests are in operational supply chain issues, especially scheduling and pricing, and in applications of operations research to public policy problems. He is the author of over 60 refereed publications, and has given over 220 academic presentations, including 85 invited presentations in 19 countries. He won the Faculty Research Award of the Fisher College of Business in 1998 and 2005. He served as President of Manufacturing and Service Operations Management Society (1999-2000), and Vice President for Membership and Professional Recognition of INFORMS (2001-2003). He continues to serve on the editorial boards of the journals Operations Research (1991-) and Management Science (1993-). His research is currently funded by grants from the National Science Foundation and EPSRC (the national scientific funding agency of the U.K.). He is the owner and founder of a consulting company, CDOR, that serves the Ohio business and government