Article contents
PRICING PERISHABLE PRODUCTS WITH COMPOUND POISSON DEMANDS
Published online by Cambridge University Press: 17 May 2011
Abstract
We consider the dynamic pricing problem of perishable products in a system with a constant production rate. Potential demands arrive according to a compound Poisson process, and are price-sensitive. We carry out the sample path analysis of the inventory process and by using level-crossing method, we derive its stationary distribution given a pricing function. Based on the distribution, we express the average profit function. By a stochastic comparison approach, we characterize the pricing strategy given different customers willingness-to-pay functions. Finally, we provide an approximation algorithm to calculate the optimal pricing function.
- Type
- Research Article
- Information
- Probability in the Engineering and Informational Sciences , Volume 25 , Issue 3 , July 2011 , pp. 289 - 306
- Copyright
- Copyright © Cambridge University Press 2011
References
REFERENCES
- 5
- Cited by