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Incremental discount policy of cell-phone carrier with connection success rate constraint

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  • Kim, Young Joo
  • Hwang, Hark

Abstract

Korean mobile carriers have implemented various service plans to gain additional market share. One of them is incremental discount policy on the call rate in which subscriber pays less for calls longer than a prescribed length. In this paper, a mathematical model is developed to find an optimal discount policy with the objective of maximizing the carrier's average expected revenue while satisfying a prescribed connection success rate. Through the analysis of the objective function we find a reduced solution space in which an optimal solution can be found by a search method. Through solving example problems the validity of the model is illustrated.

Suggested Citation

  • Kim, Young Joo & Hwang, Hark, 2009. "Incremental discount policy of cell-phone carrier with connection success rate constraint," European Journal of Operational Research, Elsevier, vol. 196(2), pages 682-687, July.
    • Handle: RePEc:eee:ejores:v:196:y:2009:i:2:p:682-687
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    References listed on IDEAS

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    1. Kim, Kap H. & Hwang, Hark, 1988. "An incremental discount pricing schedule with multiple customers and single price break," European Journal of Operational Research, Elsevier, vol. 35(1), pages 71-79, April.
    2. Peter J. Danaher, 2002. "Optimal Pricing of New Subscription Services: Analysis of a Market Experiment," Marketing Science, INFORMS, vol. 21(2), pages 119-138, February.
    3. Dipak C. Jain & Eitan Muller & Naufel J. Vilcassim, 1999. "Pricing Patterns of Cellular Phones and Phonecalls: A Segment-Level Analysis," Management Science, INFORMS, vol. 45(2), pages 131-141, February.
    4. Rubin, Paul A. & Benton, W. C., 2003. "Evaluating jointly constrained order quantity complexities for incremental discounts," European Journal of Operational Research, Elsevier, vol. 149(3), pages 557-570, September.
    5. Ronald W. Wolff, 1982. "Poisson Arrivals See Time Averages," Operations Research, INFORMS, vol. 30(2), pages 223-231, April.
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    1. Chen, Claire Y.T. & Sun, Edward W. & Miao, Wanyu & Lin, Yi-Bing, 2024. "Reconciling business analytics with graphically initialized subspace clustering for optimal nonlinear pricing," European Journal of Operational Research, Elsevier, vol. 312(3), pages 1086-1107.

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