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                Department of Systems Engineering and Engineering Management
                             The Chinese University of Hong Kong

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Date: Friday, 4:30pm - 5:30pm, December 4, 2015

Title: Higher Prices for Larger Quantities? Non-Monotonic Price-Quantity Relations in B2B Markets

Speaker: Wei Zhang, Assistant Professor, University of Hong Kong.

Abstract:

We study a microprocessor company selling short-life-cycle products to a set of buyers that includes large consumer electronic goods manufacturers. The seller has a limited capacity for each product and negotiates with each buyer for the price. Our analysis of their sales data reveals that larger purchases do not always result in bigger discounts. While existing theories cannot explain this non-monotonic pattern, we develop an analytical model and show that the non-monotonicity is rooted in how sellers value capacity when negotiating with a buyer. Large buyers accelerate the selling process and small buyers are helpful in consuming the residual capacity. However, satisfying mid-sized buyers may be costly because supplying these buyers can make it difficult to utilize the remaining capacity, which is too much for small buyers but not enough for large buyers. We briefly discuss the implications for capacity rationing and posted pricing and potential applications to other industries.

Biography:

Dr. Wei Zhang joined the Faculty of Business and Economics at the University of Hong Kong as an assistant professor in July 2015. He received his Ph.D. degree in Decisions, Operations, and Technology Management from the University of California, Los Angeles. He obtained his Master degree in Management Science and Bachelor degree in Management Information Systems from Tsinghua University.

Everyone is welcome to attend the talk!

Venue: Room 513,

       William M.W. Mong Engineering Building (ERB),

       (Engineering Building Complex Phase 2)

       The Chinese University of Hong Kong.

The talk will be hosted by:
Prof. Xiting Gong,
Department of Systems Engineering and Engineering Management,
The Chinese University of Hong Kong,
E-mail: xtgong@se.cuhk.edu.hk
Homepage: http://www1.se.cuhk.edu.hk/~xtgong/

SEEM-5201 Website: http://seminar.se.cuhk.edu.hk
Email: seem5201@se.cuhk.edu.hk