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- Member of: Theses and Dissertations
Description
It is well understood that decisions made under uncertainty differ from those made without risk in important and significant ways. Yet, there is very little research into how uncertainty manifests itself in the most ubiquitous of decision-making environments: Consumers' day-to-day decisions over where to shop, and what to buy for their daily grocery needs. Facing a choice between stores that either offer relatively stable "everyday low prices" (EDLP) or variable prices that reflect aggressive promotion strategies (HILO), consumers have to choose stores under price-uncertainty. I find that consumers' attitudes toward risk are critically important in determining store-choice, and that heterogeneity in risk attitudes explains the co-existence of EDLP and HILO stores - an equilibrium that was previously explained in somewhat unsatisfying ways. After choosing a store, consumers face another source of risk. While knowing the quality or taste of established brands, consumers have very little information about new products. Consequently, consumers tend to choose smaller package sizes for new products, which limits their exposure to the risk that the product does not meet their prior expectations. While the observation that consumers purchase small amounts of new products is not new, I show how this practice is fully consistent with optimal purchase decision-making by utility-maximizing consumers. I then use this insight to explain how manufacturers of consumer packaged goods (CPGs) respond to higher production costs. Because consumers base their purchase decisions in part on package size, manufacturers can use package size as a competitive tool in order to raise margins in the face of higher production costs. While others have argued that manufacturers reduce package sizes as a means of raising unit-prices (prices per unit of volume) in a hidden way, I show that the more important effect is a competitive one: Changes in package size can soften price competition, so manufacturers need not rely on fooling consumers in order to pass-through cost increases through changes in package size. The broader implications of consumer behavior under risk are dramatic. First, risk perceptions affect consumers' store choice and product choice patterns in ways that can be exploited by both retailers and manufacturers. Second, strategic considerations prevent manufacturers from manipulating package size in ways that seem designed to trick consumers. Third, many services are also offered as packages, and also involve uncertainty, so the effects identified here are likely to be pervasive throughout the consumer economy.
ContributorsYonezawa, Koichi (Author) / Richards, Timothy J. (Thesis advisor) / Grebitus, Carola (Committee member) / Park, Sungho (Committee member) / Arizona State University (Publisher)
Created2014
Description
This thesis focuses on developing an integrated transmission and distribution framework that couples the two sub-systems together with due consideration to conventional demand flexibility. The proposed framework ensures accurate representation of the system resources and the network conditions when modeling the distribution system in the transmission OPF and vice-versa. It is further used to develop an accurate pricing mechanism (Distribution-based Location Marginal Pricing), which is reflective of the moment-to-moment costs of generating and delivering electrical energy, for the distribution system. By accurately modeling the two sub-systems, we can improve the economic efficiency and the system reliability, as the price sensitive resources can be controlled to behave in a way that benefits the power system as a whole.
ContributorsSinghal, Nikita G (Author) / Hedman, Kory W (Thesis advisor) / Tylavsky, Daniel J (Committee member) / Sankar, Lalitha (Committee member) / Arizona State University (Publisher)
Created2014
Description
Today's competitive markets force companies to constantly engage in the complex task of managing their demand. In make-to-order manufacturing or service systems, the demand of a product is shaped by price and lead times, where high price and lead time quotes ensure profitability for supplier, but discourage the customers from placing orders. Low price and lead times, on the other hand, generally result in high demand, but do not necessarily ensure profitability. The price and lead time quotation problem considers the trade-off between offering high and low prices and lead times. The recent practices in make-to- order manufacturing companies reveal the importance of dynamic quotation strategies, under which the prices and lead time quotes flexibly change depending on the status of the system. In this dissertation, the objective is to model a make-to-order manufacturing system and explore various aspects of dynamic quotation strategies such as the behavior of optimal price and lead time decisions, the impact of customer preferences on optimal decisions, the benefits of employing dynamic quotation in comparison to simpler quotation strategies, and the benefits of coordinating price and lead time decisions. I first consider a manufacturer that receives demand from spot purchasers (who are quoted dynamic price and lead times), as well as from contract customers who have agree- ments with the manufacturer with fixed price and lead time terms. I analyze how customer preferences affect the optimal price and lead time decisions, the benefits of dynamic quo- tation, and the optimal mix of spot purchaser and contract customers. These analyses necessitate the computation of expected tardiness of customer orders at the moment cus- tomer enters the system. Hence, in the second part of the dissertation, I develop method- ologies to compute the expected tardiness in multi-class priority queues. For the trivial single class case, a closed formulation is obtained. For the more complex multi-class case, numerical inverse Laplace transformation algorithms are developed. In the last part of the dissertation, I model a decentralized system with two components. Marketing department determines the price quotes with the objective of maximizing revenues, and manufacturing department determines the lead time quotes to minimize lateness costs. I discuss the ben- efits of coordinating price and lead time decisions, and develop an incentivization scheme to reduce the negative impacts of lack of coordination.
ContributorsHafizoglu, Ahmet Baykal (Author) / Gel, Esma S (Thesis advisor) / Villalobos, Jesus R (Committee member) / Mirchandani, Pitu (Committee member) / Keskinocak, Pinar (Committee member) / Runger, George C. (Committee member) / Arizona State University (Publisher)
Created2012
Description
An increasing amount of utilities are moving towards residential demand pricing, causing much controversy and miscommunication between the provider and the consumer as to what demand pricing is, and what it entails for the consumer. This paper will analyze the effectiveness of utility-consumer communication methods and how Arizona utility companies (Salt River Project and Arizona Public Service) have migrated the obstacles of TOU (Time of Use) pricing changes to Arizona utility residents, especially to solar customers. SRP (Salt River Project) and APS (Arizona Public Service) have both implemented pilot programs including the E-27 for SRP and the Saver Choice Plus plan for APS . Both programs, along with international programs, have seen varying levels of success for their business and for consumers to grasp peak-demand pricing and usage. Overall, APS customers have seen an average increase of 4.5% on their electricity bills while SRP customers have experienced, on average, a $19.00 increase. Despite these bill increases, both utilities have seen a decrease in customer electricity demand in response to higher energy costs during peak times.
ContributorsMartinez, Brittney Alyssa (Author) / Hill, Alexander (Thesis director) / Hetrick, John (Committee member) / School of Politics and Global Studies (Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
This thesis explores revenue management within the domestic United States airline market from a broad research base including peer-reviewed journals, professional articles, industry studies, government statistics, and consumer surveys. Among other topics, the thesis synthesizes data from these sources to effectively understand how airlines turn a profit in one of the world’s most competitive industries. Within that scope, the thesis explores the history of the industry, how technology affects revenue management strategies, how deregulation affected competition, and how different costs impact an airline’s operations. This is accomplished primarily with the literature review, governmental statistics, and professionals in the field. Moreover, the surveys provide a human element to these numbers. Namely, how does the public perceive the airline industry? Moreover, what drives the decision to purchase a seat on a particular airline over another? The research suggests four main trends in the US’ airline industry: increase in low-density long-range routes, high-density short-range routes, redefining high-density routes’ capacity utilization, and expansion of the Low-Cost Carrier. The former, due to the scope of this thesis, will be diminished in its analysis. The latter three will be expanded upon. A case study of three U.S. airports identified as small, medium, and large is present at the end to expand upon a hypothesis presented.
ContributorsEledge, Andrew (Author) / Eaton, John (Thesis director) / Mokwa, Michael (Committee member) / WPC Graduate Programs (Contributor, Contributor) / School of Accountancy (Contributor) / Department of Information Systems (Contributor) / School of International Letters and Cultures (Contributor) / Barrett, The Honors College (Contributor)
Created2019-05
Description
Managed Lanes (MLs) have been increasingly advocated as a way to reduce congestion. This study provides an innovative new tolling strategy for MLs called the travel time refund (TTR). The TTR is an “insurance” that ensures the ML user will arrive to their destination within a specified travel time savings, at an additional fee to the toll. If the user fails to arrive to their destination, the user is refunded the toll amount.
To gauge interest in the TTR, a stated preference survey was developed and distributed throughout the Phoenix-metropolitan area. Over 2,200 responses were gathered with about 805 being completed. Exploratory data analysis of the data included a descriptive analysis regarding individual and household demographic variables, HOV usage and satisfaction levels, HOT usage and interests, and TTR interests. Cross-tabulation analysis is further conducted to examine trends and correlations between variables, if any.
Because most survey takers were in Arizona, the majority (53%) of respondents were unfamiliar with HOT lanes and their practices. This may have had an impact on the interest in the TTR, although it was not apparent when looking at the cross-tabulation between HOT knowledge and TTR interest. The concept of the HOT lane and “paying to travel” itself may have turned people away from the TTR option. Therefore, similar surveys implementing new HOT pricing strategies should be deployed where current HOT practices are already in existence. Moreover, introducing the TTR concept to current HOT users may also receive valuable feedback in its future deployment.
Further analysis will include the weighting of data to account for sample bias, an exploration of the stated preference scenarios to determine what factors were significant in peoples’ choices, and a predictive model of those choices based on demographic information.
To gauge interest in the TTR, a stated preference survey was developed and distributed throughout the Phoenix-metropolitan area. Over 2,200 responses were gathered with about 805 being completed. Exploratory data analysis of the data included a descriptive analysis regarding individual and household demographic variables, HOV usage and satisfaction levels, HOT usage and interests, and TTR interests. Cross-tabulation analysis is further conducted to examine trends and correlations between variables, if any.
Because most survey takers were in Arizona, the majority (53%) of respondents were unfamiliar with HOT lanes and their practices. This may have had an impact on the interest in the TTR, although it was not apparent when looking at the cross-tabulation between HOT knowledge and TTR interest. The concept of the HOT lane and “paying to travel” itself may have turned people away from the TTR option. Therefore, similar surveys implementing new HOT pricing strategies should be deployed where current HOT practices are already in existence. Moreover, introducing the TTR concept to current HOT users may also receive valuable feedback in its future deployment.
Further analysis will include the weighting of data to account for sample bias, an exploration of the stated preference scenarios to determine what factors were significant in peoples’ choices, and a predictive model of those choices based on demographic information.
ContributorsArcher, Melissa (Author) / Lou, Yingyan (Thesis advisor) / Chester, Mikhail (Committee member) / Zhou, Xuesong (Committee member) / Arizona State University (Publisher)
Created2015