Using Optimal Control for Dynamic Pricing under Learning Effect of Supply and Demand

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Jazayeri, Ali | 2010

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 40216 (01)
University: Sharif University of Technology
Department: Industrial Engineering
Advisor(s): Kianfar, Farhad
Abstract:
In this research a monopolist is considered which its object is maximization of profit during a predetermined period. Optimal control theory is used as a tool for determining of optimal trend for control variables. Price, warranty length and production rate are considered as control variables and cumulative demand and production are considered as state variables. Learning effect in production side and demand side are entered in the model too. In the demand side, learning effect shows its influences with movement of market from diffusion phase to saturation phase. In diffusion phase the demanded quantity of productions increases by increase of cumulative demand, on the contrary in the saturation phase the demanded quantity is being reduced as cumulative demand is increasing. In the supply and production side, the learning effect is introduced and considered in the model with reduction of production costs as cumulative produced quantities getting higher which is due to increase in proficiency of labors. Production failures occur stochastically and according to famous distribution functions. By this considerations and assumptions, a model is suggested and solved.
Keywords:
Dynamic Pricing ; Optimal Control ; Optimal Price ; Production Warranty ; Learning Effect