Pricing Perishable Products With Compound Poisson Demands

Guo, Pengfei; Lian, Zhaotong; Wang, Yulan

doi:10.1017/s0269964811000027

Cited by 5 publications

(3 citation statements)

References 33 publications

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“…For example, Gallego and Van Ryzin (1994) proposed and solved a dynamic pricing problem faced by the travel and leisure industry under an assumption that demand is a compound Poisson process. We refer the readers to Zipkin (2000), Zhao (2008), Yildirim and Hasenbein (2010), Guo et al (2011), andAxs€ ater (2015) for further applications. However, IGFR result for compound Poisson distributions has never been studied.…”

Section: Discrete Igfr Probability Distributionsmentioning

confidence: 99%

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Concavity and Unimodality of Expected Revenue Under Discrete Willingness to Pay Distributions

Ninh

Shen

Lariviere

2020

Production and Operations Management

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Most pricing and revenue management models have at their core an optimization problem; one needs to determine the optimal price or quantity to maximize a profit or revenue function. To ensure tractability, conditions that assure the objective function has a unique solution are enormously helpful. So far, several technical assumptions have been proposed for the continuous case, but comparatively little attention has been given to the discrete counterpart despite its prevalence in practice. Thus, this study aims to develop new technical assumptions, built upon relevant economic concepts, to guarantee the tractability of revenue management models in discrete settings. In particular, we present two sufficient conditions for the revenue function to be concave, in terms of quantity or price and propose a condition for the revenue function to be unimodal, called discrete increasing generalized failure rate (IGFR). Our definition has an appropriate economic interpretation and offers comparable properties to those of the continuous version. Finally, we show the discrete IGFR property holds for several discrete distributions.

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Section: Discrete Igfr Probability Distributionsmentioning

confidence: 99%

“…We refer the readers to Zipkin (2000), Zhao (2008), Yildirim and Hasenbein (2010), Guo et al. (2011), and Axsäter (2015) for further applications. However, IGFR result for compound Poisson distributions has never been studied.…”

Section: Discrete Igfr Probability Distributionsmentioning

confidence: 99%

Concavity and Unimodality of Expected Revenue Under Discrete Willingness to Pay Distributions

Ninh

Shen

Lariviere

2020

Production and Operations Management

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“…The first carries leftovers to the subsequent periods, while the second does not allow for this possibility. Guo, Lian, and Wang () consider the dynamic pricing problem of a perishable product under the assumptions that arrivals are distributed with a Poisson probability function and that demand is price‐sensitive. In particular, they assign a distribution function to consumers' willingness to pay.…”

Section: Introductionmentioning

confidence: 99%

Optimal Pricing and Replenishment of an Expiring Inventoried Product under Heterogeneous Consumer Sensitivities

Herbon

2017

Decision Sciences

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Efficient pricing and replenishment decisions have the potential to yield significant increase in revenues. A widespread assumption in existing models of expiring inventories is that consumers are homogeneous in their sensitivities towards the factors that influence demand. Yet, there are numerous scenarios in which consumers may vary in terms of their sensitivities. In addition, most of the current literature addresses expiring inventories for which the perceived quality deteriorates over time, while models of perishables for which the quality remains stable over time (e.g., electronic devices) or increases (e.g., green bananas, or wine) have rarely been suggested. We analyze a joint pricing and replenishment optimization model that aims to maximize the retailer's profit and is general enough to consider these three types of expiring inventories, as well as heterogeneity in consumer sensitivities. In particular, our model considers the effects of remaining shelf‐life, price and perceived quality on demand. We obtain the optimal price given any cycle length and derive the FOC (first order condition) for obtaining the optimal cycle length. By numerical study, we show that the seller might gain significant profits in cases where consumers are highly heterogeneous either in their sensitivity to price or in their sensitivity to perceived quality. In contrast, the results indicate that the seller might lose significant profits (up to 16%) when consumers are highly heterogeneous in their sensitivity to expiration. Unexpectedly, the optimal price consumers pay is, in general, only moderately affected by the heterogeneity in consumer sensitivity.

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Optimal and simple approximate solutions to a production-inventory system with stochastic and deterministic demand

Azoury

Miyaoka

2020

European Journal of Operational Research

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Pricing Perishable Products With Compound Poisson Demands

Cited by 5 publications

References 33 publications

Concavity and Unimodality of Expected Revenue Under Discrete Willingness to Pay Distributions

Concavity and Unimodality of Expected Revenue Under Discrete Willingness to Pay Distributions

Optimal Pricing and Replenishment of an Expiring Inventoried Product under Heterogeneous Consumer Sensitivities

Optimal and simple approximate solutions to a production-inventory system with stochastic and deterministic demand

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