Article ID: | iaor20061934 |
Country: | Netherlands |
Volume: | 166 |
Issue: | 1 |
Start Page Number: | 246 |
End Page Number: | 254 |
Publication Date: | Oct 2005 |
Journal: | European Journal of Operational Research |
Authors: | Cheng Russell C.H., Anjos Miguel F., Currie Christine S.M. |
Keywords: | optimization, yield management |
In many industrial settings, managers face the problem of establishing a pricing policy that maximises the revenue from selling a given inventory of items by a fixed deadline, with the full inventory of items being available for sale from the beginning of the selling period. This problem arises in a variety of industries, including the sale of fashion garments, flight seats, and hotel rooms. We present a family of continuous pricing functions for which the optimal pricing strategy can be explicitly characterised and easily implemented. These pricing functions are the basis for a general pricing methodology which is particularly well suited for application in the context of an increasing role for the Internet as means to market goods and services.