2019 Wagner Finalist: Pricing Analytics for Rotable Spare Parts

Omar Besbes, Adam N. Elmachtoub, Yunjie Sun, Columbia University

We describe a comprehensive approach to pricing analytics for reusable resources in the context of rotable spare parts, which are parts that can be repeatedly repaired and resold. Pricing rotable spare parts presents unique challenges ranging from limited data availability, minimal demand information, and complex inventory dynamics.

Working in collaboration with a major aircraft manufacturer, we develop a novel pricing analytics approach that tackles all of these challenges, and describe a large-scale implementation which resulted in 3.9% improvement in profit over a ten-month period.