NDLI: Real-time dynamic Pricing for multiproduct models with time-dependent customer arrival rates

Content Provider	IEEE Xplore Digital Library
Author	Jr-Shin Li Shuo Chen
Copyright Year	2009
Description	Author affiliation: Department of Industrial Engineering & Operations Research, Columbia University, NY, USA (Shuo Chen) \|\| Faculty of Electrical and Systems Engineering, Washington University, St. Louis, MO 63130, USA (Jr-Shin Li)
Abstract	In this article, we study the revenue management problem of multiproduct dynamic pricing in the retail industry. Given a fixed initial inventory and assortment, the retailer monitors the inventory and sets the price to affect the behavior of customer choices over a selling season. We consider the Multinomial Logit (MNL) model of customer choice over substitutes and formulate the problem of optimal dynamic pricing as an optimal stochastic intensity control problem. We derive the optimal dynamic pricing policy for the MNL model with a time-dependent customer arrival rate. Furthermore, we propose a real-time dynamic pricing (RTDP) procedure that provides on-line optimal dynamic pricing policies based on the estimation of total customer arrivals over the entire selling season. This method is realized by a simple integral transformation by which a time-inhomogeneous model is transformed to time-homogeneous with a constant customer arrival rate. A dynamic programming based numerical algorithm is presented to compute the optimal solutions and to demonstrate the robustness of the RTDP procedure.
Starting Page	2196
Ending Page	2201
File Size	1092691
Page Count	6
File Format	PDF
ISBN	9781424445233
ISSN	07431619
DOI	10.1109/ACC.2009.5160689
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2009-06-10
Publisher Place	USA
Access Restriction	Subscribed
Rights Holder	American Automatic Control Council(AACC)
Subject Keyword	Pricing Industrial control Stochastic processes Inventory management Conference management Optimal control Dynamic programming Robustness Demand forecasting Inventory control
Content Type	Text
Resource Type	Article
Subject	Electrical and Electronic Engineering

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