Abstract
For a dynamic joint price and lead-time quotation problem with a fairly general demand function, we show that the policy consisting of a threshold and a reward-maximizing lead-time is optimal. This policy offers some interesting managerial insights. Under this policy, finding the exact optimal quotation can be accomplished by single-variable policy iterations of unimodal value functions.
| Original language | English |
|---|---|
| Pages (from-to) | 1523-1527 |
| Number of pages | 5 |
| Journal | Operations Research |
| Volume | 59 |
| Issue number | 6 |
| DOIs | |
| Publication status | Published - 1 Nov 2011 |
Bibliographical note
The authors thank the associate editor, two referees, and the area editor for their constructive comments that helped improve the manuscript.Funding
This work is supported in part by Hong Kong Research Grant Council grant 6170/05E, National Science Foundation of China grant 70731003, and University of Macau grant RG031/04-05S/C88/LXM/FBA.
Keywords
- Dynamic pricing
- Lead-time quotation
- Threshold policy