Fredrik Odegaard is an Associate Professor of Management Science at Ivey Business School, with cross-appointment at the Department of Applied Mathematics, Western University. He received his PhD from Sauder School of Business at University of British Columbia, dual Masters degrees in Operations Research and Statistics from Stanford University, and a BSc in Purchasing and Logistics Management from Arizona State University. He has taught extensively at Ivey Business School and developed courses across various programs. Prior to his academic career, he worked as a Supply Chain Consultant and Programme Director. His research focus is Revenue Management and Health Care Operations, and his work has been published in academic and practitioner oriented journals. He is also an editorial board member of the Journal of Revenue and Pricing Management and served as the 2015-2016 President of the Canadian Operational Research Society.
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Odegaard, F.; Zheng, C., (Forthcoming), "Trilateral Escalation in the Dollar Auction", International Journal of Game Theory
Abstract: We find a new set of subgame perfect equilibria in a Dollar Auction that involves
three active bidders. The player who falls to the third place continues making efforts to
catch up until his lag from the frontrunner widens to a critical distance beyond which
the catchup efforts become unprofitable. At that juncture the second-place player
pauses bidding thereby bettering the chance for the third-place one to leapfrog to the
front so as to perpetuate the trilateral rivalry. Once two players have emerged as the
top two rivals, any such trilateral rivalry equilibrium produces larger total surplus for
the three players than its bilateral rivalry counterpart does, where anyone who falls to
the third place immediately drops out.
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Odegaard, F.; Maclean, K., 2022, "Revenue implications of celebrities on Broadway theatre", Journal of Revenue and Pricing Management
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Banciu, M.; Odegaard, F.; Stanciu, A., 2021, "Price and Revenue Bounds for Bundles of Information Goods", Naval Research Logistics, August 69(3): 371 - 389.
Abstract: In this paper we investigate the behavior of the expected revenue function generated from selling bundles with arbitrarily many components. A motivating example of such bundles in- clude the production and delivery of digital content, where variable costs are generally negligible. Specifically, we derive generic lower and upper bounds for the expected revenue function even when accounting for arbitrary, potentially complex, dependence structures among the bundle components. The expected revenue bounds in turn provide upper and lower bounds regarding the optimal pure bundle price. Our results reconcile the extant bundling literature involving expected revenue bounds, while sharpening some of these results even when relaxing the tradi- tional assumption of independence among the valuations for the bundle components. We show how these bounds can be further tightened when the seller has additional information about the dependence relationship. Since these results effectively reduce the search space for the op- timal bundle price, the pricing bounds provided by our framework have important managerial implications.
Link(s) to publication:
https://onlinelibrary.wiley.com/doi/abs/10.1002/nav.22018
http://dx.doi.org/10.1002/nav.22018
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Odegaard, F.; Nath Roy, S., 2021, "Heuristic-based Allocation of Supply Constrained Blood Platelets in Emerging Economies", Journal of Heuristics, April 27(5): 719 - 745.
Abstract: Platelets are valuable, but highly perishable, blood components used in the treatment of, among others, viral dengue fever, blood-related illness, and post-chemotherapy following cancer. Given the short shelf-life of 3-5 days and a highly volatile supply and demand pattern, platelet inventory allocation is a challenging task. This is especially prevalent in emerging economies where demand variability is more pronounced due to neglected tropical diseases, and a perpetual shortage of supply. The consequences of which have given rise to an illegal "red market". Motivated by experience at a regional hospital in India, we investigate the problem of platelet allocation among three priority-differentiated demand streams. Specifically we consider a central hospital which, in addition to internal emergency and non-emergency requests, faces external demand from local clinics. We analyze the platelet allocation decision from a social planner's perspective and propose an allocation heuristic based on revenue management (RM) principles. The objective is to maximize total social benefit in a highly supply-constrained environment. Using data from the aforementioned Indian hospital as a case study, we conduct a numerical simulation and sensitivity analysis to evaluate the allocation heuristic. The performance of the RM-based policy is evaluated against the current sequential first come, first serve policy and two fixed proportion-based rationing policies. It is shown that the RM-based policy overall dominates, serves patients with the highest medical urgency better, and can curtail patients' need to procure platelets from commercial sources.
Link(s) to publication:
https://link.springhttps//www.ncbi.nlm.nih.gov/pmc/articles/PMC8079886/er.com/article/10.1007/s10732-021-09474-0
https://rdcu.be/cjDpg
http://dx.doi.org/10.1007%https://dx.doi.org/10.1007%2Fs10732-021-09474-02Fs10732-021-09474-0
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Maclean, K.; Odegaard, F., 2020, "Dynamic Capacity Allocation for Group Bookings in Live Entertainment", European Journal of Operational Research, December 287(3): 975 - 988.
Abstract: A persistent problem within live entertainment is lost revenue due to unsold seats. One reason behind this problem is that venues generally permit customers, of varying group size, to freely choose seats, and thus causing a sub-optimal seating allocation with sparsely stranded single seats. Due to the experiential attribute of live entertainment, ticket requests are predominantly groups wishing sets of contiguous seats. Consequently, the sparse single seats remain unsold. To solve this operational problem we analyze a capacity based revenue management control problem that explicitly accounts for group size and customer choice. We formulate the problem as a discrete-time Markov Decision Process with the objective to maximize total expected profit. Each period, and for a given arriving group size, the manager decides which price-differentiated segments to make available. Given the offered segments, customers select seats from a particular segment or choose not to purchase any. We discuss three selection models and provide algorithms to determine the optimal solution for each. Motivated by ad hoc provisions observed in practice and due to the curse of dimensionality we provide and analyze via simulation a heuristic. Finally, based on transactional sales data from a large annual North American sporting event we showcase how the model parameters can empirically be estimated.
Link(s) to publication:
http://dx.doi.org/10.1016/j.ejor.2020.02.017
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Odegaard, F.; Zheng, C. Z., 2020, "Surplus dissipating equilibria in the dollar auction", INFOR: Information Systems and Operational Research, October 58(3): 425 - 437.
Abstract: We analyze symmetric subgame perfect equilibria of the dollar auction in its original format, without the modifications that the literature adopts to rule out overbidding in the game. The game has a continuum of subgame perfect equilibria, generating expected revenues that range from zero to the full value of the contested prize. Such multiplicity of equilibria suggests that the overbidding pattern often observed in experiments of this game might be symptoms of coordination failure among bidders, consistent with the rational choice paradigm with no need for behavioral or psychological explanations. The analysis is shown robust to extensions considering: (i) alternative tie-breaking rule that allows for multiple frontrunners, and (ii) preemptive bidding by the frontrunner.
Link(s) to publication:
http://dx.doi.org/10.1080/03155986.2019.1629771
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van de Geer, R.; V. den Boer, A.; Bayliss, C.; Currie, C.; Ellina, A.; Esders, M.; Haensel, A.; Lei, X.; Maclean, K.; Martinez-Sykora, A., et al., 2019, "Dynamic Pricing and Learning with Competition: Insights from the Dynamic Pricing Challenge at the 2017 INFORMS RM & Pricing Conference", Journal of Revenue and Pricing Management, June 18(3): 185 - 203.
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Banciu, M.; Odegaard, F.; Stanciu, A., 2019, "Distribution-free Bounds for the Expected Marginal Seat Revenue Heuristic with Dependent Demands", Journal of Revenue and Pricing Management, April 18(2): 155 - 163.
Abstract: This paper extends the fundamental static revenue management capacity control problem by incorporating statistical dependence. A single-resource is sold through multiple fare classes each with a corresponding stochastic, but not necessarily independent, demand. We explicitly account for any level of positive or negative dependence and focus on the traditional macro-level demand model in order to provide distribution-free bounds on the foundational Expected Marginal Seat Revenue heuristics, both without and with buy-up. We illustrate for the case with three fare classes and demand drawn from: (i) normal distributions, and (ii) normal and exponential distributions.
Link(s) to publication:
https://link.springer.com/article/10.1057/s41272-018-00170-6
http://dx.doi.org/10.1057/s41272-018-00170-6
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Mahjoub, R.; Odegaard, F.; Zaric, G. S., 2018, "Evaluation of a pharmaceutical risk-sharing agreement when patients are screened for the probability of success", Health Economics, January 27(1): e15 - e25.
Abstract: We analyze a game-theoretic model of a risk-sharing agreement between a payer and a pharmaceutical firm. The drug manufacturer chooses the price while the payer sets the rebate rate and decides which patients are eligible for treatment. The manufacturer provides the payer with a rebate for nonresponding patients. We generalize on the existing literature, by making both price and rebate rate decision variables, allowing the rebate rate to be different from 100%, and incorporating 2 types of administrative costs. We identify a threshold for the expected probability of response for classifying the drug as a mass-market or niche type and investigate the optimal solutions for both types. We also identify a threshold for the rebate rate at which the net benefits become equal for responding and nonresponding patients. Through numerical examples, we examine how various parameters impact the drug manufacturer's and the payer's optimal solution.
Link(s) to publication:
https://onlinelibrary.wiley.com/doi/abs/10.1002/hec.3522
http://dx.doi.org/10.1002/hec.3522
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Mirzai, F.; Odegaard, F.; Yan, X. H., 2017, "Airline Switching Revenue with Price-Guarantees", Journal of Revenue and Pricing Management, June 16(3): 308 - 324.
Abstract: Many airlines permit ticket holders to change the time of their flight by paying a switching fee. For an airline, selecting a switching fee is an important strategic decision for two reasons. First, it is a supplementary but considerable revenue item for firms with a narrow profit margin. Second, the fee impacts their demand and consequently their capacity planning. Knowing that a low or high fee could cause operational challenges, such as unsold capacity or lost sales, the question that arises is what fee should be set for switching. We model a single firm which delivers two sequential homogeneous services that are priced differently a high-priced service followed by a low-priced one. The price difference triggers a demand leakage across the two services. Switching customers pay a switching fee but get reimbursed the price difference. This reimbursement is an extension of airlines' current switching practice and money-back guarantees that are common in retail industries (such as consumer electronics). We analyze the firm's revenue function and derive the optimal switching fee. We show that the variability in switching behavior of customers drives the firm's ideal switching policy. When this uncertainty increases, the firm should impose a higher switching fee. Furthermore, the optimal switching fee is rising in the resources' prices. Finally, through numerical analysis, we investigate the joint decisions of the service price and the switching fee. This analysis shows that the optimal fee is increasing in the size of the low-price service.
Link(s) to publication:
http://dx.doi.org/10.1057/s41272-016-0055-z
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Banciu, M.; Odegaard, F., 2016, "Optimal Product Bundling with Dependent Valuations: the Price of Independence", European Journal of Operational Research, December 255(2): 481 - 495.
Abstract: In this paper we investigate the tactical problem of pricing a bundle of products when the underlying valuations of the bundle components are dependent. We use copula theory to model the joint density of reservation prices and provide analytical derivations for the prices under different bundling strategies and sharp bounds for the profit function. We discover that when only the bundle is offered and the marginal costs are relatively small, the seller is better off by bundling products that have a negative association between their valuations, while the converse is true when the marginal costs are relatively high. We also show that the net benefit of offering a full product line containing both the bundle and the components decreases for mild to strong associations between the component valuations, compared to offering just the bundle. Finally, we analyze how the typical literature assumption of independence of reservation prices impacts the seller’s profitability when in fact the valuations are dependent, and find that this gap in profitability, which we call the price of independence, can be arbitrarily large.
Link(s) to publication:
http://dx.doi.org/10.1016/j.ejor.2016.05.022
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Odegaard, F.; Wilson, J. G., 2016, "Dynamic Pricing of Primary Products and Ancillary Services", European Journal of Operational Research, June 251(2): 586 - 599.
Abstract: Motivated by the growing prevalence for airlines to charge for checked baggage, this paper studies pricing of primary products and ancillary services. We consider a single seller with a fixed capacity or inventory of primary products that simultaneously makes an ancillary service available, e.g. a single-leg flight and checked baggage service. The seller seeks to maximize total expected revenue by dynamically setting prices on both the primary product and the ancillary service. In each period, a random number of customers arrive each of whom may belong to one of three groups: those that only want the primary products, those that would buy the ancillary service if the price is right, and those that only purchase a primary product together with the ancillary service. A multi-period dynamic pricing model is presented with computational complexity only of order equal to the number of periods. For certain distributions, close to analytical results can be obtained from which structural insights may be gleaned.
Link(s) to publication:
http://dx.doi.org/10.1016/j.ejor.2015.11.026
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Hassan-Mirzaei, F.; Odegaard, F.; Yan, X. H., 2015, "Customer Revenue Sharing Program in Online Social Media", Omega-International Journal of Management Science, December 57(B): 123 - 144.
Abstract: Online social media (OSMs) have become a popular and growing Internet phenomenon, as exemplified by the millions of followers of websites like YouTube, Twitter, and Facebook. Given the Internet’s ease of access and the high degree of competition to attract users to these sites, a question arises as to whether OSMs should develop revenue-sharing programs as a way to reward their contributing users. We present an ex ante asymmetric duopoly OSM game, where heterogeneous users are either active or passive with respect to each OSM. The game includes two steps: First, the OSMs simultaneously announce their rewards for active users and second, based on their preference, users choose their level of contribution with respect to each OSM. We show that this game has a unique Nash equilibrium in pure strategies, and we identify the conditions under which a symmetric equilibrium exists, despite the asymmetry between the OSMs. Moreover, at equilibrium, no user chooses to contribute content exclusively to the less favourable OSM, even when the more favourable firm shares a lower reward than the less favourable firm. Furthermore, in some circumstances, a higher asymmetry can diminish the net revenue of the more favourable firm and vice versa.
Link(s) to publication:
http://dx.doi.org/10.1016/j.omega.2015.02.007
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Davison, M.; Odegaard, F., 2015, "Do Retailers Set Optimal Prices in the Case of Retail Gasoline Market?", International Journal of Revenue Management, June 8(3/4): 241 - 259.
Abstract: How should gasoline retailers respond to other competing retailers and to changes in commodity gasoline prices to set their own prices over time? This question opens the door to an important discussion on price-setting strategies in the retail gasoline market. Retail gasoline price data, both panel and time series, is of great interest in the economic arena since it allows the testing of many theories about price formation, oligopolistic pricing, and consumer search. In this study, we present results from a unique new dataset, including daily sales, cost, and price data from 100 retail gasoline stations in a western European country. With this data, we empirically test various economic models to confirm, in full or in part, some earlier results based on North American data. We discuss a special case in which we empirically fit a model where retailers set prices partly in response to local competitors' prices.
Link(s) to publication:
http://dx.doi.org/10.1504/IJRM.2015.073818
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Anderson, C. K.; Odegaard, F.; Wilson, J. G., 2015, "A newsvendor approach to inventory and pricing decisions in NYOP channels", Journal of Revenue and Pricing Management, February 14(1): 3 - 15.
Abstract: In opaque selling certain characteristics of the product or service are hidden from the consumer until after purchase, transforming a differentiated good into somewhat of a commodity. Opaque selling has become popular in travel service pricing as it allows firms to sell their differentiated products at higher prices to regular brand loyal customers while simultaneously selling to non-loyal customers at discounted prices. At its simplest level, the process can be regarded as a Newsvendor problem where a supplier has to make both pricing and quantity allocation decisions for a perishable good or service. As the originator of opaque selling, Priceline.com provides unique data to sellers that allows them to better utilize their opaque selling mechanism. Recently Priceline has made some changes to their mechanism that have potential impacts on how firms set prices and control inventory within the channel. In this framework, the problem has the characteristics of Newsvendor problems with multiple price points. In this article, we develop optimal pricing and inventory policies for a seller releasing inventory to an opaque sales channel. Furthermore, we investigate the impacts of Priceline’s changes upon optimal prices and inventory allocation policies. The model is empirically illustrated using Priceline data for a 3.5 star hotel.
Link(s) to publication:
http://dx.doi.org/10.1057/rpm.2014.32
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