IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Optimal Starting Times for End-of-Season Sales and Optimal Stopping Times for Promotional Fares

Listed author(s):
  • Youyi Feng

    (Department of Industrial Engineering and Operational Research, Columbia University, New York, New York 10027)

  • Guillermo Gallego

    (Department of Industrial Engineering and Operational Research, Columbia University, New York, New York 10027)

Registered author(s):

    Many industries face the problem of selling a fixed stock of items over a finite horizon. These industries include airlines selling seats before planes depart, hotels renting rooms before midnight, theaters selling seats before curtain time, and retailers selling seasonal goods such as air-conditioners or winter coats before the end of the season. Given a fixed number of seats, rooms, or coats, the objective for these industries is to maximize revenues in excess of salvage value. When demand is price sensitive and stochastic, pricing is an effective tool to maximize revenues. In this paper we address the problem of deciding the optimal timing of a single price change from a given initial price to either a given lower or higher second price. Under mild conditions, we show that it is optimal to decrease (resp., to increase) the initial price as soon as the time-to-go falls below (resp., above) a time threshold that depends on the number of yet unsold items.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 41 (1995)
    Issue (Month): 8 (August)
    Pages: 1371-1391

    in new window

    Handle: RePEc:inm:ormnsc:v:41:y:1995:i:8:p:1371-1391
    Contact details of provider: Postal:
    7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA

    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:41:y:1995:i:8:p:1371-1391. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.