• About
  • Policies
  • What is openaccess
  • Library
  • Contact
Advanced search
      View Item 
      •   BUIR Home
      • Scholarly Publications
      • Faculty of Business Administration
      • Department of Management
      • View Item
      •   BUIR Home
      • Scholarly Publications
      • Faculty of Business Administration
      • Department of Management
      • View Item
      JavaScript is disabled for your browser. Some features of this site may not work without it.

      On pricing of perishable assets with menu costs

      Thumbnail
      View / Download
      545.8 Kb
      Author
      Berk, E.
      Gürler, Ü.
      Yıldırım, G.
      Date
      2009-10
      Source Title
      International Journal of Production Economics
      Print ISSN
      0925-5273
      Electronic ISSN
      1873-0353
      Publisher
      Elsevier
      Volume
      121
      Issue
      2
      Pages
      678 - 699
      Language
      English
      Type
      Article
      Item Usage Stats
      102
      views
      93
      downloads
      Abstract
      We consider dynamic pricing of perishable assets in the presence of price-sensitive renewal demand processes. Unlike the existing works in the literature, we explicitly incorporate non-negligible price change costs which reflects the revenue management practice more realistically. These costs are also known as menu costs in the economic literature. The objective is to maximize the discounted expected profit for an initial inventory of Q items by determining the selling prices dynamically. We employ a dynamic programming approach and formulate a model that captures the price– demand relationship. We establish some theoretical results on the properties of the problem at hand. Specifically, we establish the sufficient conditions under which the within-period profit is concave in the selling price and in the remaining shelf life and, furthermore, show the structure of the myopically and asymptotically optimal pricing policy. In a numerical study, we investigate the impact of various system parameters and, in particular, the existence of menu costs, on pricing decisions. We observe that ignoring menu costs may be significantly misleading for the implementation of revenue management. We also propose four implementable policy heuristics and examine their performances. Our findings support some results previously obtained in settings with continuous pricing and negligible price change costs; and, contradict some others.
      Keywords
      Perishable Assets
      Menu Costs
      Dynamic Pricing
      Revenue Management
      Permalink
      http://hdl.handle.net/11693/11851
      Published Version (Please cite this version)
      http://dx.doi.org/10.1016/j.ijpe.2009.02.010
      Collections
      • Department of Industrial Engineering 677
      • Department of Management 551
      Show full item record

      Browse

      All of BUIRCommunities & CollectionsTitlesAuthorsAdvisorsBy Issue DateKeywordsTypeDepartmentsThis CollectionTitlesAuthorsAdvisorsBy Issue DateKeywordsTypeDepartments

      My Account

      Login

      Statistics

      View Usage StatisticsView Google Analytics Statistics

      Bilkent University

      If you have trouble accessing this page and need to request an alternate format, contact the site administrator. Phone: (312) 290 1771
      Copyright © Bilkent University - Library IT

      Contact Us | Send Feedback | Off-Campus Access | Admin | Privacy