TY - JOUR
T1 - PRICING PERISHABLE PRODUCTS WITH COMPOUND POISSON DEMANDS
AU - Guo, PENGFEI
AU - Lian, ZHAOTONG
AU - Wang, YULAN
PY - 2011/7
Y1 - 2011/7
N2 - 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.
AB - 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.
KW - dynamic pricing
KW - level-crossing
KW - perishable inventory
KW - revenue management
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U2 - 10.1017/S0269964811000027
DO - 10.1017/S0269964811000027
M3 - 21_Publication in refereed journal
VL - 25
SP - 289
EP - 306
JO - Probability in the Engineering and Informational Sciences
JF - Probability in the Engineering and Informational Sciences
SN - 0269-9648
IS - 3
ER -