Paper
Ordering and Dynamic Pricing of Service Products in the Pre-sale Period
- Authors:
- Yongwu Zhou; Shiping Zhou; Haijuan Wang; Shuiping Zhou; Men Yuying; Bitao Peng
- Abstract
- In the information age, service products will be sold through online advance booking systems, and the reservations will be canceled by the end of pre-sale period. Therefore, in order to maximize the revenue, firms will adjust the selling price of service products dynamically. Taking into account both initial order quantity and dynamic pricing, this paper investigates three questions 1) n, the number of price adjustments in the pre-sale period, 2) pi, the selling price which is set during time [Ti-1, Ti], 3) Q, the initial ordering quantity of the service product. A mathematical model is developed to find the optimal order quantity, and a solution algorithm is proposed to determine the optimal dynamic pricing strategy. The numerical example shows the effectiveness of the model and the algorithm, and the superiority of dynamic pricing strategy compared with the static strategy. Additionally, the influence of other parameters on the optimal policies is analyzed when the times of price adjustment times are known. The innovation of this paper is to study the optimal number of dynamic pricing of service products under an online advance booking system.
- Keywords
- Service Products; Dynamic Pricing; Order Polices; Reservation
- StartPage
- 1
- EndPage
- 11
- Doi