Journal ArticleDOI
Optimal dynamic pricing of inventories with stochastic demand over finite horizons
Reads0
Chats0
TLDR
In this paper, the authors investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm's objective is to maximize expected revenues, and obtain structural monotonicity results for the optimal intensity resp, price as a function of the stock level and the length of the horizon.Abstract:
In many industries, managers face the problem of selling a given stock of items by a deadline We investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm's objective is to maximize expected revenues Examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry, which markets space such as seats on airline flights, cabins on vacation cruises, and rooms in hotels that become worthless if not sold by a specific time
We formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity resp, price as a function of the stock level and the length of the horizon For a particular exponential family of demand functions, we find the optimal pricing policy in closed form For general demand functions, we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple, fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity Finally, we extend our results to the case where demand is compound Poisson; only a finite number of prices is allowed; the demand rate is time varying; holding costs are incurred and cash flows are discounted; the initial stock is a decision variable; and reordering, overbooking, and random cancellations are allowedread more
Citations
More filters
Journal ArticleDOI
Pricing and the News Vendor Problem: a Review with Extensions
TL;DR: This paper provides a comprehensive review that synthesizes existing results for the single period problem and develops additional results to enrich the existing knowledge base, and reviews and develops insight into a dynamic inventory extension of this problem.
Journal ArticleDOI
Revenue Management: Research Overview and Prospects
Jeff McGill,Garrett van Ryzin +1 more
TL;DR: This survey reviews the forty-year history of research on transportation revenue management and covers developments in forecasting, overbooking, seat inventory control, and pricing, as they relate to revenue management.
Journal ArticleDOI
Dynamic Pricing in the Presence of Inventory Considerations: Research Overview, Current Practices, and Future Directions
TL;DR: In this paper, a review of the literature and current practices in dynamic pricing is presented, where the focus is on dynamic (intertemporal) pricing in the presence of inventory considerations.
Journal ArticleDOI
Revenue Management Under a General Discrete Choice Model of Consumer Behavior
TL;DR: This paper analyses a single-leg reserve management problem in which the buyers' choice behavior is modeled explicitly and develops an estimation procedure based on the expectation-maximization (EM) method that jointly estimates arrival rates and choice model parameters when no-purchase outcomes are unobservable.
Journal ArticleDOI
Commissioned Paper: An Overview of Pricing Models for Revenue Management
Gabriel R. Bitran,René Caldentey +1 more
TL;DR: This publication contains reprint articles for which IEEE does not hold copyright and which are likely to be copyrighted.
References
More filters
Book
Optimization by Vector Space Methods
TL;DR: This book shows engineers how to use optimization theory to solve complex problems with a minimum of mathematics and unifies the large field of optimization with a few geometric principles.
Book
Discrete Choice Theory of Product Differentiation
TL;DR: This important study shows that an understanding of product differentiation is crucial to understanding how modern market economies function and that differentiated markets can be analyzed using discrete choice models of consumer behavior.
Journal ArticleDOI
Point processes and queues, martingale dynamics
TL;DR: In this article, Martingales et al. present an integral representation of point-processes and queues in a Markovian network of queues, based on the Stieltjes-Lebesgue integral calculus.
Journal ArticleDOI
A taxonomy and research overview of perishable-asset revenue management: yield management, overbooking, and pricing
TL;DR: In this article, the authors propose the term perishable-asset revenue management to denote the field that combines the areas of yield management, overbooking, and pricing for perishable assets.