IORA Seminar on "The New Frontier in Price Optimization"

 

David Simchi-Levi is a Professor of Engineering Systems at MIT and Chairman of Opalytics, a cloud analytics platform company.  He is considered one of the premier thought leaders in supply chain management and business analytics.

His research focuses on developing and implementing robust and efficient techniques for operations management. He has published widely in professional journals on both practical and theoretical aspects of supply chain and revenue management.

His Ph.D. students have accepted faculty positions in leading academic institutes including U. of California Berkeley, Columbia U., Cornell U., Duke U., Georgia Tech, Harvard U., U. of Illinois Urbana-Champaign, U. of Michigan, Purdue U. and Virginia Tech.

Professor Simchi-Levi co-authored the books Managing the Supply Chain (McGraw-Hill, 2004), the award winning Designing and Managing the Supply Chain (McGraw-Hill, 2007)and The Logic of Logistics (3rd edition, Springer 2013). He also published Operations Rules: Delivering Customer Value through Flexible Operations (MIT Press, 2011).

Professor Simchi-Levi is the current Editor-in-Chief of Management Science, one of the two flagship journals of INFORMS. He served as the Editor-in-Chief for Operations Research (2006-2012), the other flagship journal of INFORMS and for Naval Research Logistics (2003-2005). He is an INFORMS Fellow, MSOM Distinguished Fellow and the recipient of the 2014 INFORMS Daniel H. Wagner Prize for Excellence in Operations Research Practice; 2014 INFORMS Revenue Management and Pricing Section Practice Award; 2009 INFORMS Revenue Management and Pricing Section Prize and Ford 2015 Engineering Excellence Award.

Professor Simchi-Levi has consulted and collaborated extensively with private and public organizations. He was the founder of LogicTools which provided software solutions and professional services for supply chain optimization. LogicTools became part of IBM in 2009. In 2012 he co-founded OPS Rules, an operations analytics consulting company. The company became part of Accenture in 2016.

The New Frontier in Price Optimization

Retail and online sellers are dealing with a competitive environment while at the same time managing their own complex multi-channel environments.  These companies are already lean so there is not much room to cut costs. Therefore, the ability to increase revenue and improve margins through a more technologically advanced price optimization process can make a huge difference in their business. Indeed, the combination of accessible data, ability to experiment on line and new analytic technologies enable an innovative approach to pricing. 

In practice, however, online sellers are faced with a few business constraints, including the inability to conduct extensive experimentation, limited inventory and high demand uncertainty. In this talk we discuss models and algorithms that combine machine learning and optimization for pricing that significantly improve revenue. We report results from live implementations at companies such as Rue La La, Groupon and B2W, a large South American online retailer.