Article ID: | iaor20041410 |
Country: | United States |
Volume: | 5 |
Issue: | 3 |
Start Page Number: | 203 |
End Page Number: | 229 |
Publication Date: | Mar 2003 |
Journal: | Manufacturing & Service Operations Management |
Authors: | Bitran Gabriel, Caldentey Ren |
Keywords: | revenue management |
In this paper, we examine the research and results of dynamic pricing policies and their relation to revenue management. The survey is based on a generic revenue management problem in which a perishable and nonrenewable set of resource satisfy stochastic price-sensitive demand processes over a finite period of time. In this class of problems, the owner (or the seller) of these resources uses them to produce and offer a menu of final products to the end customers. Within this context, we formulate the stochastic control problem of capacity that the seller faces: How to dynamically set the menu and the quantity of products and their corresponding prices to maximize the total revenue over the selling horizon.