Service Engineering : The Future of Service Feature Design and Pricing Guillermo Gallego and Catalina Stefanescu

Service Engineering: The Future of Service Feature Design and Pricing

Guillermo Gallego and Catalina Stefanescu 1

U.S. airlines achieved a startling turnaround in 2009. Profits rose to $2.3 billion after a loss of $3.3 billion the year before. Also during 2009, the airlines collected $2.7 billion in baggage fees (U.S. Bureau of Transportation Statistics 2010). In other words, by charging separately for a service once associated with the price of a ticket, the airlines turned a potential loss into a profit....

Appendix: Upgrades, Upsells and Pricing in Revenue Management

In this Appendix we first present the connection between the stochastic and the deterministic demand model used in Section 2 of the paper. We use the notation of the paper but also expand it as necessary to present the stochastic model and the results. In particular, we flesh out two dual based heuristics for the stochastic problem. Secondly, we briefly explain the connection between the stocha...

Optimal (R, Q) policy and pricing for two-echelon supply chain with lead time and retailer’s service-level incomplete information

Many studies focus on inventory systems to analyze different real-world situations. This paper considers a two-echelon supply chain that includes one warehouse and one retailer with stochastic demand and an up-to-level policy. The retailer’s lead time includes the transportation time from the warehouse to the retailer that is unknown to the retailer. On the other hand, the warehouse is unaware ...

Two-level supply chain quality improvement through a wholesale price coordination contract on pricing, quality and services

Nowadays, competitive market creates the necessity of quality improvement in different levels of supply chains (SCs). This paper contributes to the SC coordination literature and proposes a bilateral coordination contract for optimizing pricing decisions along with quality improvement decisions in different echelons of a real case of a cell phone SC. The SC comprises a manufacturer who deals wi...