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Xiao Alison Chen, assistant professor of decision sciences,听studies revenue management and pricing behavior that takes place in supply chain settings involving suppliers and retailers.

In a typical scenario, which is much like a game of chess, the retailer makes an optimal ordering decision to minimize inventory cost based on the supplier鈥檚 price. The supplier, on the other hand, chooses an optimal price to maximize the profit. Chen says her research 鈥渉elps to illuminate the effects of market demand and cost parameters on the optimal pricing and ordering decisions.鈥�

Analyzing variables such as demand, inventory costs and market price, Chen extends the current literature on pricing from a single- to a multi-period model. In a single-period model, the goods sold only have value during one selling period. In a multi-period model, the goods sold have value over multiple over multiple days, weeks, months or years. Therefore, inventory can be carried to the next period.

The multi-period model benefits retailers and suppliers alike.

鈥淪uppliers can see how they might price their products over a longer time, implementing gradual discounts to loyal customers,鈥� says Chen. 鈥淩etailers may derive the supply chain鈥檚 profit allocation ratio to determine the maximum percentage of the total profit that could be theirs. If they鈥檙e below their ceiling, they can improve their ordering strategies.鈥�