Show simple item record

dc.contributor.authorBerk, E.en_US
dc.contributor.authorGürler, Ü.en_US
dc.contributor.authorYıldırım, G.en_US
dc.date.accessioned2015-07-28T11:59:04Z
dc.date.available2015-07-28T11:59:04Z
dc.date.issued2009-10en_US
dc.identifier.issn0925-5273
dc.identifier.urihttp://hdl.handle.net/11693/11851
dc.description.abstractWe 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.en_US
dc.language.isoEnglishen_US
dc.source.titleInternational Journal of Production Economicsen_US
dc.relation.isversionofhttp://dx.doi.org/10.1016/j.ijpe.2009.02.010en_US
dc.subjectPerishable Assetsen_US
dc.subjectMenu Costsen_US
dc.subjectDynamic Pricingen_US
dc.subjectRevenue Managementen_US
dc.titleOn pricing of perishable assets with menu costsen_US
dc.typeArticleen_US
dc.departmentDepartment of Managementen_US
dc.citation.spage678en_US
dc.citation.epage699en_US
dc.citation.volumeNumber121en_US
dc.citation.issueNumber2en_US
dc.identifier.doi10.1016/j.ijpe.2009.02.010en_US
dc.publisherElsevieren_US
dc.identifier.eissn1873-0353


Files in this item

Thumbnail

This item appears in the following Collection(s)

Show simple item record