The Internet as an Enabler for Dynamic Pricing for Goods

Abstract—The Internet offers the potential for dynamic pricing for a wide range of products across the supply chain. Dynamic pricing can be formally defined as the buying and selling of goods in markets where prices move quickly in response to supply and de-mand fluctuations. Unlike physical markets where change occurs slowly because of information delays, change occurs very rapidly on the Internet. In the marketplace, the Internet is a powerful tool for almost instantaneous consumer feedback. For example, prices can be changed dynamically to meet demand because the cost of changing a price may be lower on the Internet than in physical markets. The success of dynamic pricing is helping in the growth of new businesses, including broad-based e-commerce portals new in-teractive networks. This paper has several objectives. The first ob-jective is to look at factors that affected the use of dynamic pricing in the past. The second objective is to summarize the notion of dy-namic pricing over the Internet. The third objective is to examine the different methods for collecting dynamic demand data over the Internet. The final objective is to present two models to optimize the revenue obtained for build-to-forecast and build-to-order envi-ronments. Index Terms—Dynamic pricing, e-commerce, Internet, mathe-matical programming