31. European Conference on Operational Research

Capacitated price bundling – an analysis of factors influencing the profitability of different strategies

Ralf Gössinger, Jacqueline Wand

For price bundling we assume limited vendor capacity and stochastic willingness to pay (wtp) of several customer segments. In this context, it is questionable whether the advantages of the strategies “no bundling”, “pure bundling” and “mixed bundling” observed for the uncapacitated case are still valid. Given the above assumptions, the profitability of strategies is influenced by factors originating from the spheres of capacity and market. The available capacity can possess different levels of product flexibility. To analyze its impact, a distinction is made between dedicated and common capacity, which can be used to produce one or all product types, respectively. Since market segmentation is ambiguous, different numbers of segments, segment sizes, wtps, heterogeneities, etc. can also have an impact on profit. As a starting point, we propose an optimization approach that considers both capacity and market segmentation aspects in a stochastic NLP model. To conduct a full-factorial numerical study, the model is solved for more than 2,000 problem instances. Economic insights are gained by statistically analyzing the impact of characteristics of both, customer segments and capacity on profit. Building on this, profit polynomials of the strategies are fitted and comparatively analyzed in order to delimit their areas of dominance.

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