PRICING PERISHABLE PRODUCTS WITH COMPOUND POISSON DEMANDS
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Author(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 289-306 |
| Journal / Publication | Probability in the Engineering and Informational Sciences |
| Volume | 25 |
| Issue number | 3 |
| Online published | 17 May 2011 |
| Publication status | Published - Jul 2011 |
| Externally published | Yes |
Link(s)
Abstract
We consider the dynamic pricing problem of perishable products in a system with a constant production rate. Potential demands arrive according to a compound Poisson process, and are price-sensitive. We carry out the sample path analysis of the inventory process and by using level-crossing method, we derive its stationary distribution given a pricing function. Based on the distribution, we express the average profit function. By a stochastic comparison approach, we characterize the pricing strategy given different customers willingness-to-pay functions. Finally, we provide an approximation algorithm to calculate the optimal pricing function. © Copyright Cambridge University Press 2011.
Research Area(s)
- dynamic pricing, level-crossing, perishable inventory, revenue management
Citation Format(s)
PRICING PERISHABLE PRODUCTS WITH COMPOUND POISSON DEMANDS. / Guo, PENGFEI; Lian, ZHAOTONG; Wang, YULAN.
In: Probability in the Engineering and Informational Sciences, Vol. 25, No. 3, 07.2011, p. 289-306.Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
