Pricing in revenue management for multiple firms competing for customers

Dai, Yue; Chao, Xiuli; Song, Fang; Nuttle, Henry L. W.

doi:10.1016/j.ijpe.2004.06.056

Cited by 71 publications

(53 citation statements)

References 19 publications

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“…Furthermore, Dai et al (2004) continued the study for oligopoly competition, but it takes a different assumption that the competition of few firms (oligopoly) is partially developed by doing duopoly competition repetitively. To describe that condition, Dai et al (2004) apply the game theory.…”

Section: "Rm Is Concerned With Such Demand-management Decisions Refermentioning

confidence: 99%

“…To describe that condition, Dai et al (2004) apply the game theory. It describes a mathematical model to analyze the system when firms face stochastic and deterministic demand.…”

Section: "Rm Is Concerned With Such Demand-management Decisions Refermentioning

confidence: 99%

“…This paper proposes a model based on the model which has been developed by Dai et al (2004). However, some improvements are proposed.…”

Section: "Rm Is Concerned With Such Demand-management Decisions Refermentioning

confidence: 99%

See 2 more Smart Citations

Mathematical Model for Revenue Management with Overbooking and Costly Price Adjustment for Hotel Industries

Masruroh¹,

Mulyani²

2013

Industrial Engineering and Management Systems

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Revenue management (RM) has been widely used to model products characterized as perishable. Classical RM model assumed that price is the sole factor in the model. Thus price adjustment becomes a crucial and costly factor in business. In this paper, an optimal pricing model is developed based on minimization of soft customer cost, one kind of price adjustment cost and is solved by Lagrange multiplier method. It is formed by expected discounted revenue/bid price integrating quantity-based RM and pricing-based RM. Quantity-based RM consists of two capacity models, namely, booking limit and overbooking. Booking limit, built by assuming uncertain customer arrival, decides the optimal capacity allocation for two market segments. Overbooking determines the level of accepted order exceeding capacity to anticipate probability of cancellation. Furthermore, pricing-based RM models occupancy/demand rate influenced by internal and competitor price changes. In this paper, a mathematical model based on game theoretic approach is developed for two conditions of deterministic and stochastic demand. Based on the equilibrium point, the best strategy for both hotels can be determined.

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Section: "Rm Is Concerned With Such Demand-management Decisions Refermentioning

confidence: 99%

“…To describe that condition, Dai et al (2004) apply the game theory. It describes a mathematical model to analyze the system when firms face stochastic and deterministic demand.…”

Section: "Rm Is Concerned With Such Demand-management Decisions Refermentioning

confidence: 99%

See 1 more Smart Citation

Mathematical Model for Revenue Management with Overbooking and Costly Price Adjustment for Hotel Industries

Masruroh¹,

Mulyani²

2013

Industrial Engineering and Management Systems

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“…They obtained the structural properties of the optimal policies and established conditions on the inventory-and time-monotonicity of the optimal prices. For settings with multiple products or firms, we can cite the recent works by Maglaras and Meissner (2006) who considered dynamic pricing and capacity allocation strategies and by Diai et al (2005) who studied pricing decisions for competing actors in a theoretic approach. For a broader review of the theory and practice of revenue management, we refer the reader to Talluri and van Ryzin (2004).…”

Section: Introductionmentioning

confidence: 99%

On pricing of perishable assets with menu costs

Berk

Gürler

Yıldırım

2009

International Journal of Production Economics

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a b s t r a c tWe consider dynamic pricing of perishable assets in the presence of price-sensitive renewal demand processes. Unlike the existing works in the literature, we explicitly incorporate non-negligible price change costs which reflects the revenue management practice more realistically. These costs are also known as menu costs in the economic literature. The objective is to maximize the discounted expected profit for an initial inventory of Q items by determining the selling prices dynamically. We employ a dynamic programming approach and formulate a model that captures the pricedemand relationship. We establish some theoretical results on the properties of the problem at hand. Specifically, we establish the sufficient conditions under which the within-period profit is concave in the selling price and in the remaining shelf life and, furthermore, show the structure of the myopically and asymptotically optimal pricing policy. In a numerical study, we investigate the impact of various system parameters and, in particular, the existence of menu costs, on pricing decisions. We observe that ignoring menu costs may be significantly misleading for the implementation of revenue management. We also propose four implementable policy heuristics and examine their performances. Our findings support some results previously obtained in settings with continuous pricing and negligible price change costs; and, contradict some others.

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“…In seller-buyer models, the seller produces a product, and after that in a wholesale price sells that to the buyer. Buyer in her turn retails the mention product to the consumer (Yang & Zhou, 2006; Chen et al, 2006;Dai et al, 2005) A wide literature exists on the suppliers' competition and their strategic choices. In categorizing the strategic behavior of seller-buyer supply chain, it could be falls into game theory decision making.…”

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confidence: 99%

New Approach of Game Theory for Seller’s Price Selecting Strategies in Bi-Level Programming

Shahanaghi¹,

Rad²

2016

MAS

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The relationships between the members of supply chain were modeled in many researches, such as cooperative and non-cooperative situation. In our paper, the main question is how much and for which price should each seller offer her product to maximize the profit. In the proposed methodology, Bi-level programming is used for modeling and then GAMS (general algebraic modeling system) language for solving the problem. In the presented model, the first level, called upper sub-problem and supposed as leader is trying to maximize each seller profits by obtaining the optimal offered quantity of individual seller. The objective of follower (buyer) is at second level. The lower sub-problem uses the results of the seller's model and then maximizes its profit. These optimizations are obtained with regard to the some other constraints. Similar the other game theories problems, the Nash equilibrium point(s) is (are) the optimum decision of this seller-buyer supply chain. A numerical example is employed to illustrate the application of the proposed method. Keywords: Bi-level programming, Nash equilibrium, seller-buyer, supply chain management 1. Introduction In recent decades, big changes happen in different industries, so more competition is observed in selling markets. Each members of supply chain such as seller and buyer will try to maximize its own profit or on the other hand minimize its costs. In seller-buyer models, the seller produces a product, and after that in a wholesale price sells that to the buyer. Buyer in her turn retails the mention product to the consumer (Yang & Zhou, 2006; Chen et al, 2006;Dai et al, 2005) A wide literature exists on the suppliers' competition and their strategic choices. In categorizing the strategic behavior of seller-buyer supply chain, it could be falls into game theory decision making. Nash equilibrium is one of the solutions which are accepted by all players. Also, using this solution concept is very common. Hence, at first the profit of each seller will be calculated in different possible strategy. Then, after considering the buyer conditions Nash equilibrium points and its optimum selected strategy of each seller would be found. On the other hand the proposed method is a seller selecting with regard to the parameters, decision variables and objects functions of not only sellers but the buyer. Generally, each seller are intended in selling its products as high as it is possible, but exist competition forced seller to offer acceptable prices. The strategy of offering prices of seller depends on other seller (the opponents) behavior, total demand and many other factors. For a seller, it is so significant and critical to select a good price choosing strategy according to its opponents' behavior and other conditions. Hence, it's better for sellers to solve their problem by game theory. The game based methods, which will be used in this article, are more useful in solving these problems. The game based problem solutions can be classified as follows in (Soleymani et al, 2007;Ferr...

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Pricing in revenue management for multiple firms competing for customers

Cited by 71 publications

References 19 publications

Mathematical Model for Revenue Management with Overbooking and Costly Price Adjustment for Hotel Industries

Mathematical Model for Revenue Management with Overbooking and Costly Price Adjustment for Hotel Industries

On pricing of perishable assets with menu costs

New Approach of Game Theory for Seller’s Price Selecting Strategies in Bi-Level Programming

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