TITLE:
Dynamic Pricing for Perishable Products with Control of Cancellation Demands and Strategic Consumer
AUTHORS:
Hao Li, Meirong Tan, Liuxin Zou
KEYWORDS:
Control of Cancellation Demands, Revenue Management, Dynamic Pricing, Strategic Consumer
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.4 No.7,
August
2,
2016
ABSTRACT: In this paper, we consider the case that the consumers may cancel their
reservations during the booking period so that consumers are divided into two
parts: cancellation request and booking request. Simultaneously, we assume that
consumers act strategically in booking products. Upon receiving the request,
the firm has to decide whether to accept the cancellation request and what fees
to charge the booking request in the presence of strategic
consumers. We propose optimal price strategy and show the
effectiveness of the decision models. We also obtain the optimal control of
cancellation demands policy which is achieved by the number of remaining
inventory. Numerical experiments are presented to explore the effect of various
parameters on the performance of optimal strategy.