HANOVER, MD, April 12, 2007 – The Chrysler Group, has been named one of only five finalists in an international competition that singles out the best project by an organization.
The winner of the Franz Edelman competition will be announced at a special awards banquet during The Institute for Operations Research and the Management Sciences (INFORMS®) Conference on O.R. Practice in Vancouver from April 29-May 1. http://meetings.informs.org/Practice07/
Every year, the Franz Edelman competition recognizes outstanding examples of Operations Research (O.R.)-based projects that have transformed companies, entire industries, and people’s lives. O.R. uses advanced analytical methods to help make better decisions and is a disciplined way by which management can improve organizational performance in a wide variety of situations, in nearly any type of organization in the public or private sector.
Past Franz Edelman winners have included Motorola, Merrill Lynch, Canadian Pacific Railway, and IBM.
The Chrysler Group’s submission is “PIN Incentive Planning System: A Decision Support System for Planning Automobile Manufacturers' Pricing and Promotions.”
Pricing decisions play an important role in the marketing mix plan of most companies, but especially so at automakers like the Chrysler Group. Automakers keep their manufacturers suggested retail and wholesale prices fixed throughout the year, then customize pricing through seasonal incentives that reflect supply and demand conditions. The magnitude of these decisions is a staggering $45 billion per year across automakers in the U.S. market alone. Just a 5% increase in pricing efficiency can result in $2 billion in savings for American automakers.
Working with J.D. Power and Associates, the Chrysler Group, a unit of DaimlerChrysler AG, implemented an O.R. decision support system called PIN (Power Information Network) Incentive Planning System to optimize and customize the company’s pricing decisions.
The model is used to predict the impact on market share and sales volume of incentive programs offered by the Chrysler Group, as well as the impact of competitors’ incentive programs on Chrysler Group vehicles..
The PIN approach is based upon a transaction-based econometric model of product (vehicle model, such as Jeep® Grand Cherokee), acquisition (cash, finance with multiple terms, lease) and program-type (cash back, promotional APR, cash/promotional APR combination) choice. The model allows the Chrysler Group to make pricing decisions at the local market, region and national market levels.
The Edelman competition will take place throughout the day at the Sheraton Wall Centre in Vancouver on Monday, April 30. The winner will be announced at a banquet in the Grand Ballroom of the Sheraton. The winner will be announced at the gala approximately 9:15 PM. A press release announcing the winner will be issued the next day, May 1.
The additional 2007 Franz Edelman finalists are:
- Coca-Cola, for a project entitled “Optimizing Distribution at Coca-Cola Enterprises”
- The U.S. Coast Guard, for “Maximizing Aircraft Availability by Managing Aircraft Maintenance Throughput at the U.S. Coast Guard Aircraft Repair and Supply Center”
- Hewlett-Packard, for “Procurement Risk Management at Hewlett-Packard Company”
- Memorial Sloan-Kettering Cancer Center for “Operations Research Answers to Cancer Therapeutics”
Additional information about the Edelman Competition is online at http://www.scienceofbetter.org/Edelman.
About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.
About The Chrysler Group
The Chrysler Group, headquartered in Auburn Hills, Mich., produces Chrysler, Jeep®, Dodge and Mopar® brand vehicles and products. The Chrysler Group is a unit of DaimlerChrysler AG, the world's fifth largest automaker, which produces passenger and commercial vehicles, including the Mercedes-Benz, Maybach, smart and Freightliner brands.
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