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      Performance bounds on optimal fixed prices

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      Author
      Şen, A.
      Date
      2013
      Source Title
      Operations Research Letters
      Print ISSN
      0167-6377
      Electronic ISSN
      1872-7468
      Volume
      41
      Issue
      5
      Pages
      530 - 534
      Language
      English
      Type
      Article
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      Abstract
      We consider the problem of selling a fixed stock of items over a finite horizon when the buyers arrive following a Poisson process. We obtain a general lower bound on the performance of using a fixed price rather than dynamically adjusting the price. The bound is 63.21% for one unit of inventory, and it improves as the inventory increases. For the one-unit case, we also obtain tight bounds: 89.85% for the constant-elasticity and 96.93% for the linear price-response functions.
      Keywords
      Dynamic pricing
      Heuristics
      Revenue management
      Yield management
      Finite horizons
      Performance bounds
      Poisson process
      Price-response functions
      Permalink
      http://hdl.handle.net/11693/20853
      Published Version (Please cite this version)
      http://dx.doi.org/10.1016/j.orl.2013.06.013
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