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An Overview of Pricing Models for Revenue Management

  • Gabriel Bitran


    (Sloan School of Management, MIT, Cambridge, Massachusetts 02139)

  • René Caldentey


    (Stern School of Business, New York University, New York, New York 10012)

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    In this paper, we examine the research and results of dynamic pricing policies and their relation to revenue management. The survey is based on a generic revenue management problem in which a perishable and nonrenewable set of resources satisfy stochastic price sensitive demand processes over a finite period of time. In this class of problems, the owner (or the seller) of these resources uses them to produce and offer a menu of final products to the end customers. Within this context, we formulate the stochastic control problem of capacity that the seller faces: How to dynamically set the menu and the quantity of products and their corresponding prices to maximize the total revenue over the selling horizon.

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    Article provided by INFORMS in its journal Manufacturing & Service Operations Management.

    Volume (Year): 5 (2003)
    Issue (Month): 3 (August)
    Pages: 203-229

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    Handle: RePEc:inm:ormsom:v:5:y:2003:i:3:p:203-229
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