Dynamic pricing problems with elastic demand

S. Marbán, G.R.J. Zwaan, van der, A. Grigoriev, B. Hiller, T. Vredeveld

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2 Citations (Scopus)

Abstract

We consider a dynamic pricing problem for a company that sells a single product to a group of price-sensitive customers over a finite time horizon. The objective is to set the prices over time so as to maximize revenue. Two price-sensitivity models are studied: multiplicative and additive demand change. We develop a polynomial-time algorithm for the multiplicative model. In contrast, we prove that the problem under additive demand change is NP-hard and admits an FPTAS. Keywords: Dynamic pricing; Elastic demand; Revenue optimization; Computational complexity; Approximation scheme
Original languageEnglish
Pages (from-to)175-179
Number of pages5
JournalOperations Research Letters
Volume40
Issue number3
DOIs
Publication statusPublished - 2012
Externally publishedYes

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    Marbán, S., Zwaan, van der, G. R. J., Grigoriev, A., Hiller, B., & Vredeveld, T. (2012). Dynamic pricing problems with elastic demand. Operations Research Letters, 40(3), 175-179. https://doi.org/10.1016/j.orl.2012.01.005