Management Science · 2000 · 183 citations · 21 references
ManagementEconomicsOperations ManagementPricing StrategyPricing TheoryRevenue ManagementDynamic PricingIntertemporal PricingPerishable Inventory ManagementPrice OptimizationRevenue OptimizationYield ManagementContinuous-time Economic ModelsDynamic Pricing For PerishablesIntensity ControlOptimal Control Of PricesPerishable Inventory PricingPoisson Process ModelsRevenue Management For PerishablesYield Management Pricing
The article develops a continuous‑time yield‑management model that permits reversible price changes. The model assumes perishable assets offered at discrete price levels with Poisson demand, and it formulates revenue maximization as an intensity‑control problem solved in closed form. The optimal policy uses a concave envelope of price levels, and the paper presents its properties, implementation guidance, and numerical examples.
This article studies a continuous-time yield management model in which reversible price changes are allowed. We assume that perishable assets are offered at a set of discrete price levels. Demand at each level is a Poisson process. To maximize the expected revenue, management controls the price dynamically as sales evolve. We show that a subset of these prices that form a concave envelope is potentially optimal. We formulate the problem into an intensity control model and derive the optimal solution in closed form. Properties of the optimal solution and their policy implementations are discussed. Numerical examples are provided.
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