An overview of pricing models for revenue management

An overview of pricing models for revenue management

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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: ,
Keywords: revenue management
Abstract:

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.

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