Optimal pricing policies for perishable products

Optimal pricing policies for perishable products

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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: , ,
Keywords: optimization, yield management
Abstract:

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.

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