Dynamic Pricing of Seasonal Goods with Cancellation Right in an Advance-Sale System

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Asiabi, Afshin | 2011

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 41185 (01)
University: Sharif University of Technology
Department: Industrial Engineering
Advisor(s): Modarres Yazdi, Mohammad
Abstract:
In this investigation, two pricing models are extended with continuous and periodic price settings through dynamic programming approach. In this problem, we intend to sell a perishable product in a finite horizon with no salvage value through an advance-sale system. The objective function in these models is maximizing expected value of firms’ revenue by setting optimal prices in pricing periods. Demand is assumed to be stochastic time and price-dependent and also customers might cancel their reservations by paying a penalty before delivery. Structural properties of the optimal policy are investigated for both models and the concavity and inventory monotonicity properties are proved for both. Furthermore, initial capacity is supposed to be a decision variable such as optimal prices for continuous model and its optimal value is calculated. Contrast is made between the model with cancellation right and the model without it and a better objective function of the model with cancellation right is demonstrated for lower initial capacity and higher sale horizon. Numerical examples are presented to illustrate the models
Keywords:
Dynamic Pricing ; Dynamic Programming ; Revenue Management ; Perishable Products ; Cancellation Right

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