A Constraint Logic Programming Algorithm for Modeling Dynamic Pricing

A Constraint Logic Programming Algorithm for Modeling Dynamic Pricing

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Article ID: iaor200953668
Country: United States
Volume: 20
Issue: 1
Start Page Number: 69
End Page Number: 77
Publication Date: Jan 2008
Journal: INFORMS Journal On Computing
Authors:
Keywords: programming: constraints
Abstract:

We extend Lemke's algorithm to solve a dynamic pricing problem. We identify an instance in which Lemke's algorithm fails to converge to an optimal solution (when an optimum does exist) and propose a constraint logic programming solution to this problem. We analyze the complexity of the extended Lemke's algorithm. Our analysis shows that, in the short term, dynamic pricing can be used to improve resource management efficiency. It is also shown that dynamic pricing can be used to manage the long–term behavior of demand.

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