Relationships Among Three Assumptions in Revenue Management

“…Subsequently, IGFR distributions have been used in many supply chain models, and also in stochastic models of service systems (Lariviere and Porteus 2001, Cachon 2003, Ziya et al 2004.…”

Section: Introductionmentioning

confidence: 99%

A Note on Closure Properties of Failure Rate Distributions

Paul

2005

Operations Research

View full text Add to dashboard Cite

Increasing generalized failure rate (IGFR) distributions were introduced as a tool in the study of contracting mechanisms in supply chains. In this note, we compare and contrast the closure-and the lack thereof-of IGFR and increasing failure rate (IFR) distributions with respect to standard operations on random variables. Some implications of these results for the use of IGFR distributions in supply chain models are noted.

show abstract

“…Several papers in this area use deterministic demand models to capture complex multiproduct, multiresource, or dynamic environments (e.g., Cote et al 2003, Kachani and Perakis 2006, Kuyumcu and Popescu 2006. Ziya et al (2004) analyze demand conditions that ensure regularity in deterministic models.…”

Section: Relation To the Literaturementioning

confidence: 99%

Pricing and Revenue Management: The Value of Coordination

2014

View full text Add to dashboard Cite

T he integration of systems for pricing and revenue management must trade off potential revenue gains against significant practical and technical challenges. This dilemma motivates us to investigate the value of coordinating decisions on prices and capacity allocation in a stylized setting. We propose two pairs of sequential policies for making static decisions-on pricing and revenue management-that differ in their degree of integration (hierarchical versus coordinated) and their pricing inputs (deterministic versus stochastic). For a large class of stochastic, price-dependent demand models, we prove that these four heuristics admit tractable solutions satisfying intuitive sensitivity properties. We further evaluate numerically the performance of these policies relative to a fully coordinated model, which is generally intractable. We find it interesting that near-optimal performance is usually achieved by a simple hierarchical policy that sets prices first, based on a nonnested stochastic model, and then uses these prices to optimize nested capacity allocation. This tractable policy largely outperforms its counterpart based on a deterministic pricing model. Jointly optimizing price and allocation decisions for the high-end segment improves performance, but the largest revenue benefits stem from adjusting prices to account for demand risk.

show abstract

Relationships Among Three Assumptions in Revenue Management

Cited by 114 publications

References 9 publications

A Note on Probability Distributions with Increasing Generalized Failure Rates

A Note on Probability Distributions with Increasing Generalized Failure Rates

A Note on Closure Properties of Failure Rate Distributions

Pricing and Revenue Management: The Value of Coordination

Contact Info

Product

Resources

About