| Article ID: | iaor20123345 |
| Volume: | 40 |
| Issue: | 3 |
| Start Page Number: | 175 |
| End Page Number: | 179 |
| Publication Date: | May 2012 |
| Journal: | Operations Research Letters |
| Authors: | Vredeveld Tjark, Grigoriev Alexander, Marbn Sebastin, van der Zwaan Ruben, Hiller Benjamin |
| Keywords: | combinatorial optimization |
We consider a dynamic pricing problem for a company that sells a single product to a group of price‐sensitive customers over a finite time horizon. The objective is to set the prices over time so as to maximize revenue. Two price‐sensitivity models are studied: multiplicative and additive demand change. We develop a polynomial‐time algorithm for the multiplicative model. In contrast, we prove that the problem under additive demand change is NP‐hard and admits an FPTAS.