Revenue Management and Survival Analysis in the Automobile Industry

Transcription

1 Andre Jerenz Revenue Management and Survival Analysis in the Automobile Industry With a foreword by Prof. Dr. Ulrich Tushaus GABLER EDITION WISSENSCHAFT

2 List of Figures List of Tables Nomenclature xiii xv xvii 1 Introduction Motivation Outline and Research Contribution 2 2 Revenue Management and the Automobile Industry Concept of Revenue Management Definition of Revenue Management The History of Revenue Management Industry-Specific Applications of Revenue Management The Revenue Management Framework Conditions for the Application of Revenue Management The Automobile Industry! State of the Global Automobile Industry The German Automobile Industry Segmentation of the German Passenger Car Market The German Used Car Market Revenue Management in the Automobile Industry Current Applications of Revenue Management Assessment of the Automobile Industry Price-Based Revenue Management in the Used Car Sector Selling Process of Used Vehicles Analysis of Current Pricing Strategies Potential for Improvement 26

3 2.4.4 Outline of the Approach Summary 30 Modeling the Price-Based Revenue Management Problem Introduction Statement of the Dynamic Pricing Problem Literature Review Outline Basic Continuous-Time Model Statement of the Basic Control Problem Dynamic Programming Approach Stochastic Dynamic Program for the Intensity Control Problem Closed Form Solutions Stochastic Discrete-Time Model Statement of the Discrete-Time Control Problem Solution Algorithm Finite Price Sets Solution for Continuous-Time Models Solution for Discrete-Time Models Extensions of the Basic Problem Current Value Formulation Inventory Costs Values Associated with Terminal State The Complete Model Summary 61 Survival Analysis: Estimation of the Price-Response Function Reservation Price and Price Response Function The Reservation Price Concept Classification of Estimation Methods Further Discussion of Non-Experimental Market Data Methods Time Duration Market Data Application to the Used Car Sector Survival Analysis Introduction Basic Concepts and Notation Estimation of the Survivor Function Parametric Regression Modeling The Cox Proportional Hazards Model Accelerated Failure Time Models Summary 88

4 4.4 Estimation of the Price Response Function Relationship between Asking Price and Time on Market Hedonic Pricing: Estimation of Expected Market Value Estimation of the Expected Survival Functions Summary 96 Validation of the Survival Analysis Approach Introduction Used Car Study Dataset and Descriptive Statistics Model Building Cox Model Model Identification Adequacy Checking of the Cox Model Internal Validation of the Cox Model Ill 5.4 Accelerated Failure Time Model Model Identification Assessment of Model Fit for the Log-Logistic Distribution Internal Validation of the Log-Logistic AFT Model Spline Regression Extended Model Model Selection for Spline Regression Extension Regression Splines Model Development Validation of the Extended Log-Logistic Model Presentation of the Extended Log-Logistic Model Summary 133 Computational Analysis: Proof of Concept General Description of the Revenue Management Program The Optimization Module The Demand Forecasting Module Case Study for a Selected Used Vehicle Description of a Selected Example Estimation of the Individual Price Response Function Estimation of Market Value Applying Hedonic Price Modeling Determination of the Optimal Pricing Strategy Comparison of Expected versus Observed Revenue Assessment of Potential for Profit Enhancement Calculation of Discounted Profit for Observed Sales Determining Expected Profit Applying Optimal Pricing Strategies Comparison and Analysis 149

5 xii Contents 6.4 Summary Conclusions and Further Directions Directions for Future Research Summary 155 References. 157 Index 167