Problem $1$: Discussion Question

In what ways can a retailer such as Nordstorm take advantage of revenue management opportunities?

Answer:

$$

$$

Problem $2$: Discussion Question

Explain the use of outlet stores such as Saks Fifth Avenue in the context of revenue management. How does the presence of outlet stores help Saks? How does it help its more valuable customer, who is willing to pay full price?

Answer:

$$

$$

Problem $3$: NatBike, a bicycle manufacturer, has identified two customer segments; one that prefers a customized bicycle and is willing to pay a higher price and another that is willing to take a standardized bicycle but is more price sensitive$.$ Assume that the cost of manufacturing either bicycle is $$200.$ Demand from the customized segment has a demand curve of $$and the demand from the price$-$sensitive standard segment is $.$

a$)$ What price should NatBike charge each segment if there is no capacity constraint?

b$)$ What price should NatBike charge each segment if the total available capacity is $20,000$ bicycles?

c$)$ What is the total profit in each case?