Saroja Subrahmanyan

Developing optimal pricing and inventory policies for retailers who face uncertain demand

Abstract Retailers who sell products such as new fashion items or new toys face considerable uncertainty in demand. Despite this uncertainty, they are required to make two important decisions that depend on the level of demand. First, they need to decide on how the product should be priced over the selling season. Second, they need to determine how much to stock and reorder each period. In this paper, we develop a new model for use by retailers that incorporates the following. First it includes “learning” or updating of demand. Second, it determines the optimal pricing policy. Third, it determines the optimal stocking policy. The new model appears to offer advantages for new items where the selling season is limited and the retailer is quite uncertain about the true demand distribution. Several example problems are solved to illustrate the potential advantages and to indicate the types of questions that can be investigated with the model.

Integrated approach to understanding consumer behavior at bottom of pyramid

Purpose – It is estimated that the poorest of the world, termed as being economically at the bottom of the pyramid (BoP), have a purchasing power of

Using quantitative models for setting retail prices

5 trillion. This paper aims to study what and why they consume, and how firms can best address those needs, an area that is relatively new.Design/methodology/approach – The authors categorize the products and services people at the bottom of the pyramid consume with specific examples of both products and companies in Asia, Africa, and Latin America, and look at the theoretical frameworks that could explain those consumption patterns.Findings – The authors find that despite income and resource constraints, BoP consumers are sophisticated and creative. They are motivated not just by survival and physiological needs but seek to fulfill higher order needs either to build social capital, for cultural reasons or as a compensatory mechanism. They also find that when firms offer products that also fulfill these higher order needs, especially through linkages to educ...

Understanding Different Types of Subsistence Economies The Case of the Batwa of Buhoma, Uganda

Products that have a short selling season face high uncertainty in demand. Retailers who sell such products therefore find the task of pricing and inventory challenging. Many retailers consider making these decisions as an art form and do not use quantitative models that are developed by researchers. Describes how retailers typically make pricing and inventory decisions and also reviews quantitative models that have been developed by researchers to improve on one or more of these decisions. A classification of these models is developed and how they can assist the retailer is explained. A simple explanation of two mathematical tools, Bayesian updating of information and dynamic programming, which are commonly mentioned in the literature are also given.

Understanding the inherent complexity of sustainable consumption: A social cognitive framework

The Batwa of Buhoma, Uganda, a remote hunter-gatherer community were evicted from their forest in 1992 in order to provide a sanctuary for the mountain gorillas. Based on individual and group interviews, this commentary provides a case study that describes how the Batwa now address their basic needs, and how they participate in the formation of subsistence markets and microenterprises. In positioning this study, four types of subsistence economies are identified: nature-based, nonprofit-based, market-based, and hybrid. In addition, different types of subsistence markets are identified, namely, within community and cross community markets. This then raises several questions for future research and for subsistence communities like the Batwa’s regarding how to achieve sustainability.