Tactical and Strategic Sales Management for Intelligent Agents Guided By Economic Regimes
AbstractWe present a computational approach that autonomous software agents can adopt to make tactical decisions, such as product pricing, and strategic decisions, such as product mix and production planning, to maximize profit in markets with supply and demand uncertainties. Using a combination of machine learning and optimization techniques, the agent is able to characterize economic regimes, which are historical microeconomic conditions reflecting situations such as over-supply and scarcity. We assume an agent is capable of using real-time observable information to identify the current dominant market condition and we show how it can forecast regime changes over a planning horizon. We demonstrate how the agent can then use regime characterization to predict prices, price trends, and the probability of receiving a customer order in a dynamic supply chain environment. We validate our methods by presenting experimental results from a testbed derived from the Trading Agent Competition for Supply Chain Management (TAC SCM). The results show that our agent outperforms traditional short- and long-term predictive methodologies (such as exponential smoothing) significantly, resulting in accurate prediction of customer order probabilities, and competitive market prices. This, in turn, has the potential to produce higher profits. We also demonstrate the versatility of our computational approach by applying the methodology to prediction of stock price trends.
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Bibliographic InfoPaper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2008-061-LIS.
Date of creation: 20 Oct 2008
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Web page: http://www.erim.eur.nl/
dynamic pricing; machine learning; agent-mediated electronic commerce; market forecasting; rational decision making;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
- NEP-CMP-2008-11-25 (Computational Economics)
- NEP-CSE-2008-11-25 (Economics of Strategic Management)
- NEP-FOR-2008-11-25 (Forecasting)
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