1. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com Foreseeing Customer Value: a Pricing Game Learning Tool Alfredo Abarca School of Business and Economics, Marketing and Supply Chain Management, College of Charleston, Charleston, SC 29424-0001 abarcaa@cofc.edu Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina

2. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com We know that in a Supply Chain environment there are a lot of tough decisions to take. We, as instructors, are interested in teaching students how to make rational decisions in difficult situations. Of course there are plenty of models and algorithms, books and papers… but, at the end, we know that in real life, common sense prevails. The niche…

3. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com We are not interested in developing a new algorithm but in implementing a web-based computer application that simulates the arrival of consumers to a depot center in which there are suppliers. Customers are looking for the best bargain. Therefore, given a supply chain situation we want to focus on how to set unit’s selling price and order lot size in such a way that we maximize profits. The niche…

4. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com Each supplier has a warehouse far away from a depot center where he sells. Each supplier must transport units from his/her warehouse to this depot center. There are holding inventory costs as well as transportation costs. Each supplier foresees how many units he may sell along with its price for a specific time horizon. The suppliers

5. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com Customers arrive randomly to this depot center. It may come in one or more customers at the same time Each customer prearranges both the order size of units he needs and how much he is willing to pay per each unit. The customers

6. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com

7. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com Customer’s order sizes and prices are unknown data to suppliers. Customer decision process focus on the best price. If more than two suppliers have the same minimum price, the computer application decides randomly. Suppliers and customers

8. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com You as a supplier You as a supplier compare the quality of your decision with the optimal one: decisions with perfect information.

9. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com The application’s residence is myprice.besana111.commyprice.besana111.com It is written in php and JavaScripts over a mySQL database engine. The computer application

10. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com

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13. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com Application’s Results

14. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com Application’s Results

15. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com User’s Performance

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17. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com A web-based computer application has been developed to simulate customers willing to buy products to suppliers. Unit price and lot sizes are the decision variables suppliers must deal with. You, as a supplier, compare your decisions with those ones made with perfect information. Analyzing your scores –your prices- you learn how to play better against Natura Recapping…

18. SDSI Southeast Decision Sciences Institute Thirty-Ninth Annual Meeting February 18-20, 2009 Charleston, South Carolina www.besana111.com Thank you