In the economics literature, the Consumer Surplus is traditionally defined for the case where demand is a deterministic function of the price. However, in most operations management problems, demand is assumed to be stochastic, and hence stock-outs can occur. To measure consumer welfare in such...

We study how retailers can use data aggregation and clustering to improve demand prediction. High accuracy in demand prediction allows retailers to more effectively manage their inventory and mitigate stock-outs and excess supply. A typical retail setting involves predicting demand for hundreds...

1. Introduction -- 2. Data Pre-Processing and Modeling Factors -- 3. Common Demand Prediction Methods -- 4. Tree-Based Methods -- 5. Clustering Techniques -- 6. Evaluation and Visualization -- 7. More Advanced Methods -- 8. Conclusion and Advanced Topics.

How should a firm price a new product for which little is known about demand? We propose a simple pricing rule: the firm only estimates the maximum price it can charge and still expect to sell at least some units, and then sets price as though the actual demand curve were linear. We show that if...