TITLE:
Dynamic Pricing of Perishable Products under Consumer Factor
AUTHORS:
Yanming Ge, Jianxin Zhang
KEYWORDS:
Revenue Management, Dynamic Pricing, Perishable Product, Bellman Equation
JOURNAL NAME:
Journal of Service Science and Management,
Vol.4 No.4,
December
7,
2011
ABSTRACT: With effect of consumer factor considered, a model for dynamic pricing of perishable products is proposed. By this model, we obtained a property of the value function: marginal value is a decreasing function of the capacity and an increasing function of the consumer factor. Basing on this property, we proposed the following pricing strategy: according to the regions that the perishable products are sold, we adopt the appropriate consumer factor and then use the routine pricing strategy. This strategy not only maximizes the retailer’s revenue but also improves its service level. Lastly, a constructive example is discussed.