Optimal dynamic pricing for two perishable and substitutable products

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dc.contributor.authorLi, Fengen
dc.contributor.committeechairLin, Kyle Y.en
dc.contributor.committeememberBish, Ebru K.en
dc.contributor.committeememberFraticelli, Barbara M. P.en
dc.contributor.departmentIndustrial and Systems Engineeringen
dc.date.accessioned2011-08-06T14:42:48Zen
dc.date.adate2003-12-09en
dc.date.available2011-08-06T14:42:48Zen
dc.date.issued2003-11-18en
dc.date.rdate2003-12-09en
dc.date.sdate2003-12-03en
dc.description.abstractThis thesis presents a dynamic pricing model where a seller offers two types of a generic product to a random number of customers. Customers show up sequentially. When a customer arrives, he will ---depending on the prices---either purchase one unit of type 1 product or one unit of type 2 product, or will leave empty-handed. The sale ends either when the entire stock is sold out, or when the customers are exhausted. The seller's task is to post the optimal prices for the two product types to each customer to maximize the expected total revenue. We use dynamic programming to formulate this problem, and derive the optimal policy for special cases. For general cases, we develop an algorithm to approximate the optimal policy and use numerical examples to demonstrate the efficiency of the algorithm. Finally, we apply the results to a continuous-time model where customers arrive according to a Poisson process. We develop a heuristic policy and use numerical examples to show the heuristic policy is very effective.en
dc.description.degreeMaster of Scienceen
dc.format.mediumETDen
dc.identifier.otheretd-12032003-154353en
dc.identifier.sourceurlhttp://scholar.lib.vt.edu/theses/available/etd-12032003-154353en
dc.identifier.urihttp://hdl.handle.net/10919/9630en
dc.publisherVirginia Techen
dc.relation.haspartLi_thesis.pdfen
dc.rightsIn Copyrighten
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/en
dc.subjectProduct varietyen
dc.subjectRevenue managementen
dc.subjectDynamic pricingen
dc.subjectQuality differentiateden
dc.titleOptimal dynamic pricing for two perishable and substitutable productsen
dc.typeThesisen
thesis.degree.disciplineIndustrial and Systems Engineeringen
thesis.degree.grantorVirginia Polytechnic Institute and State Universityen
thesis.degree.levelmastersen
thesis.degree.nameMaster of Scienceen

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