SPARSE SOLUTION IN OPERATIONS: ROUTING AND PRICING PROBLEMS

Abstract

The belief that “a little flexibility added at the right place can reap significant benefits for operations” has been widely accepted by the operations management community. Unfortunately, despite the extensive literature on operational flexibility, to date, there is no known methodology that can be used to guide managers to design sparse (i.e., slightly flexible) and yet efficient operations. This dissertation focuses on developing a generic method to design such a sparse solution in a general supply chain network, and understand the performance of some special sparse pricing schemes in a bundle pricing problem. We observe the importance of the marginal distribution function of consumer utility in studying the bundle pricing problem. We further address its benefit in a multi-product pricing problem in the last chapter. In addition, we develop a novel data-driven pricing framework “Marginal Estimation + Price Optimization” for the multi-product pricing problem from aggregate sales data.