Setting prices centrally, w/optimization yields higher profits than local pricing
Thursday, August 13, 2015 - 10:51
in Mathematics & Economics
A study on granting local sales people pricing discretion shows that profits improve by up to 11% when local sales forces are empowered to negotiate with customers. However a centralized system that uses optimization techniques and limits local sales discretion improves profits still further, by an additional 20%. The research appears in the current issue of Management Science, a publication of the Institute for Operations Research and the Management Sciences (INFORMS), the leading professional association in analytics and operations research.