The Pricing Game- An online Activity- Samar Mohamed

In my role as the CTE Liaison in the Faculty of Engineering I work with instructors in creating pedagogically sound online activities that enhance the students’ learning experience. I really like an activity that I worked on with Prof. Benny Mantin, a Management Sciences Professor who wanted to design an online activity that proves to the students the importance of a specific topic. He was teaching a senior undergraduate course that focuses on production and service operation management. In this course the students learned about Competitive dimensions, Forecasting, Planning, Inventory, Scheduling and Revenue management.

Benny noticed that his students learn better when he includes in-class small group activities and/or games; therefore, he aimed to create interactive environments both in-class and online.

Benny designed an online activity that could assist the students in leaning the idea of Revenue Management. To learn this topic, the students should be convinced of the dynamic pricing concept. This involves understanding techniques used by companies to maximize their revenue by matching fixed supply with uncertain demand under some restrictions such as fixed inventory, commitment to sell the product, and differences among customers.

Current literature assumes that demand is passive while Benny believes that different consumers respond differently to price changes, and this was one thing he wanted to prove by this game. He also wanted to let the students experience what it is like to be a customer in a fluctuating price environment because he believed it would teach them about different actions that companies take to maximize their profit. The challenge Benny had was to design a game that reveals these concepts to students. In this game students were expected to figure out what was the underlying model of price changes and use the forecasting techniques that they learned earlier in the course to estimate the trend in the price function.

In this game the students were supposed to be planning to visit a relative who lived in a fictitious city. The flight was planned to take off on a specific date and time, so the students needed to purchase their tickets on or before that time. The only airline carrier that flies to this city opens the flight for reservations two weeks before the flight date. The students were supposed to be on a limited budget, so they should be looking for the cheapest price.

Similar to other airlines, this airline uses a revenue management system that automatically updates the price over time in order to maximize its profit. During the two weeks, the system updated the price twice a day at specific times. The students were randomly grouped to different teams in which each team had a different destination with a different underlying price function. The reason for this grouping was to avoid collaboration between students and to see different responses to different price trends or functions.

Every time the student logged into the system (UW-ACE) he could check the currently available fare. If the student was not interested in purchasing the ticket with this price he simply exited the system. If interested, the student could purchase the ticket by clicking on the “purchase” button. Once purchased, a confirmation message would appear, and the paid price would be recorded (using automatic agents in ACE).

The students could keep checking the price and could purchase it anytime before the deadline (only the first purchase was counted for). In a perfect world, the students were supposed to estimate the underlying function or trend in the price and select the appropriate time to buy the ticket. One mark was given to the students for participation (purchasing the ticket) and additional one or two bonus marks for the performance in the game (using UW-ACE to track the students who check the price regularly).

The participation rate was 91% for this game and the students’ feedback was excellent. They liked the idea of the game and it made them think about the underlying functions and why companies operate as they do, which was the initial learning objective of the game. All in all, Benny’s pedagogical innovation was highly successful.

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Samar Mohamed

Samar Mohamed

Samar Mohamed is the CTE Liaison for Faculty of Engineering. Prior to joining the Centre for Teaching Excellence Samar worked as a Post Doctoral Fellow in Electrical and Computer Engineering Dept. She received both her MSc and PhD from the University of Waterloo

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