MIT Sloan Executive Education recently hosted the latest in its INNOVATION@WORKTM webinar series, entitled “The New Frontier in Price Optimization," with MIT Professor David Simchi-Levi. The webinar, now available on demand, which drew hundreds of attendees from across the world, presented recent breakthroughs in the development of models that combine machine learning and optimization for pricing that significantly improve revenue and reduce inventory risks
During the webinar, Simchi-Levi presented a case study on Rue La La—an online retailer with whom he worked that offers invitation-only flash sales—to answer the question: “How can we generate an effective forecast for a product we’ve never sold before?” His second example, Groupon, a daily deal website and mobile application offering things to do, see, eat, and buy, focused on how to combine forecasting with learning on the fly to understand the probability that a customer will purchase a product at a specific price. Simchi-Levi’s third case-in-point was the story of B2W Digital, the leading e-commerce company in Latin America, which took price optimization even further by leveraging forecasting, learning on the fly, and optimization.
The event included a live question and answer session and was immediately followed by a Facebook chat with the webinar audience. Recently we spoke with Professor Simch-Levi to dig deeper into the topic of pricing optimization.