Demand Shaping Through Bundling and Product Configuration: A Dynamic Multiproduct Inventory-Pricing Model

In today’s digital age with advanced information technology and analytic tools, such as the internet and data mining, many companies use dynamic bundling to influence demand to match up with the operational status, especially in industries with short product life cycles. In “Demand Shaping through Bundling and Product Configuration: A Dynamic Multiproduct Inventory-Pricing Model,” Jing-Sheng Song and Zhengliang Xue present a novel dynamic model to analyze how exactly the inventory dynamics impact the bundling strategy and, in turn, how the bundling strategy affects the firm's inventory decisions. They also characterize how the optimal bundling decision depends on item complementarity, cost structure, inventory levels, demand uncertainty, and supply responsiveness.