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Revenue management with customers' reference price: are the existing methods effective?
, Article Service Science ; Volume 10, Issue 2 , May , 2018 , Pages 195-214 ; 21643962 (ISSN) ; Sibdari, S ; Modarres, M ; Sharif University of Technology
INFORMS Inst.for Operations Res.and the Management Sciences
2018
Abstract
Existing revenue management methods and heuristics rely on specific demand-side assumptions such as customers' independent decisions over time. We relax the assumption that purchasing decisions depend only on the current price and are independent of previous prices of the same or similar products. On the contrary, we assume that customers' decisions depend on the product's past prices through a reference price. With this new dimension, a firm needs not only to manage its remaining capacity but also to control the reference price to maximize its expected future profit. In this situation, we show that some of the main analytical properties such as monotonicity or modularity of the firm's value...
Developing a Decomposition Approach for Network Revenue Management Considering Reference Price: Focusing on Hotel Industry
, Ph.D. Dissertation Sharif University of Technology ; Modarres Yazdi, Mohammad (Supervisor)
Abstract
This dissertation develops a new approach in network revenue management problems, with concentration on hotel industry. Several methods and heuristics are suggested in the literature to obtain an appropriate solution for network problems, however their focus is mostly on the transportation carriers. These heuristics do not seem to have satisfying effectiveness for hotel industry cases, because of significant difference between these two industries including the network structures, demand distributions and competition markets. On the other hand, with the tremendous growth of the internet and online sale channels, customers’ purchase behavior is modifying drastically. However this behavioral...
Dynamic Pricing with Considering Customers Negotiation and Reference Price Effect
, M.Sc. Thesis Sharif University of Technology ; Modarres Yazdi, Mohammad (Supervisor)
Abstract
This thesis studies optimal pricing policy of a firm selling perishable products in a retail store facing stochastic arrival of customers whom may ask for a bargain. With the tremendous growth of the internet and online sale channels, the ability of customers to get detailed information about previous sales creates an expectation for reasonable price of product in customers' opinion called reference price which has great impacts on their willingness to pay. In this work, we address the problem of determining a pricing strategy considering reference price effects in addition to customers' negotiation ability. We use dynamic programming to model retailer's problem, which considering reference...
An Integrated Model of Pricing and Production with Reference Price Effect and Quality Diversity
, M.Sc. Thesis Sharif University of Technology ; Modarres Yazdi, Mohammad (Supervisor)
Abstract
In this research, we consider a made-to-order production system which receives orders for a single product. The demand is stochastic and price-dependent. We also consider a sale index that links the demand of each period to the demands as well as to the quality of the previous periods. The variety of quality levels and its effect on the amount of orders make this revenue management complicated. Furthermore, the price of each product is related to its quality and sales index. Furthermore, reference price causes the model to be significantly more complicated. We model the problem within the framework of dynamic programming approach to maximize the discounted profit of the firm during a...
Dynamic Pricing by Considering Reference Price Effects in Competitive Environment
, M.Sc. Thesis Sharif University of Technology ; Modarres, Mohammad (Supervisor)
Abstract
Taking into account the impact of advertising on the reference price, we propose an optimal pricing strategy for supply chains in competitive industries subject to reference price effect. Most of researches do not consider the competition among supply chains. An industry with two competing supply chains is considered. Each supply chain includes a manufacturer who sells his/her product via a retailer. There are two types of structures: integrated and decentralized (it is assumed that the relation in a chain is Manufacturer– Stackelberg). Each manufacturer offers wholesale price to his/her retailer anticipating the retailer’s order quantity. In addition, the retailers choose their retail...