An Overview of Pricing Models for Revenue Management

Posted: 26 Sep 2003

See all articles by Gabriel R. Bitran

Gabriel R. Bitran

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Rene Caldentey

University of Chicago - Booth School of Business

Abstract

In this paper, we examine the research and results of dynamic pricing policies and their relation to Revenue Management. The survey is based on a generic Revenue Management problem in which a perishable and non-renewable set of resources satisfy stochastic price-sensitive demand processes over a finite period of time. In this class of problems, the owner (or the seller) of these resources uses them to produce and offer a menu of final products to the end customers. Within this context, we formulate the stochastic control problem of capacity that the seller faces: how to dynamically set the menu and the quantity of products and their corresponding prices in order to maximize the total revenue over the selling horizon.

Keywords: Survey, Revenue Management, Pricing Policies, Perishable and Non-renewable Resources, Stochastic Demand Processes

Suggested Citation

Bitran, Gabriel R. and Caldentey, Rene, An Overview of Pricing Models for Revenue Management. MIT Sloan Working Paper No. 4433-03, Available at SSRN: https://ssrn.com/abstract=374260

Gabriel R. Bitran (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E53-355
Cambridge, MA 02142
United States
617-253-2652 (Phone)
617-258-7579 (Fax)

Rene Caldentey

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://www.chicagobooth.edu/faculty/directory/c/rene-caldentey

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