Which practice utilizes differential pricing to maximize profits from a limited supply chain?

The practice that utilizes differential pricing to maximize profits from a limited supply chain is revenue management. This concept involves adjusting prices strategically based on various factors such as demand fluctuations, customer segments, and inventory levels. By implementing differential pricing strategies, businesses can optimize their revenue by charging different prices to different customers or for different quantities or times of purchase, allowing them to capture consumer surplus and manage supply in a way that aligns with customer willingness to pay.

Revenue management is particularly effective in industries with perishable goods or fixed capacities, such as airlines, hotels, and retail, where maximizing revenue from each available unit becomes crucial. It involves analyzing and forecasting demand to set prices that can change dynamically, ensuring that the profit potential is maximized while balancing supply with customer demand effectively.

In contrast, cost management focuses primarily on reducing business expenses, supply chain optimization is about improving overall efficiency and effectiveness across the supply chain, and demand forecasting involves estimating future customer demand to guide inventory and production planning. Each of these areas plays an important role in supply chain management, but they do not specifically concentrate on the nuanced pricing strategies that define revenue management.