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ESSAYS ON REVENUE MANAGEMENT
by
Chunyang Tong
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Ful¯llment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(BUSINESS ADMINISTRATION)
May 2007
Copyright 2007 Chunyang Tong
Object Description
| Title | Essays on revenue management |
| Author | Tong, Chunyang |
| Author email | chunyant@usc.edu |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Business administration |
| School | Marshall School of Business |
| Date defended/completed | 2006-11-27 |
| Date submitted | 2007 |
| Restricted until | Restricted until 18 Jan. 2009. |
| Date published | 2009-01-18 |
| Advisor (committee chair) | Dasu, Sriram |
| Advisor (committee member) |
Rajagopalan, Sampath Bassok, Yehuda Sosic, Greys Tan, Guofu |
| Abstract | For this thesis, I combined two of my research works on revenue management and dynamic pricing problems and built upon them with current literature and contribute to these themes in two ways. The first way extends the existing, pricing decision model by relaxing commonly used assumptions about demand -- and that is customers tend to be strategic, rather than myopic, in the sense that they time their purchases to maximize their payoffs. The second contribution is to take a different view on analyzing pricing issues that relate to assets, which are renewable, rather than perishable. Thus, this second contribution concerns a different modeling for supply.; Chapter 2 studies dynamic pricing policies for a monopolist selling perishable products over a finite time horizon to buyers who are strategic. Buyers are strategic in the sense that they anticipate the firm's pricing policies. I am interested in situations where auctions are not feasible and it is costly to change prices. I begin by showing that unless strategic buyers expect shortages dynamic pricing will not increase revenues. I investigate two pricing schemes that I call posted and contingent pricing. In the posted pricing scheme at the beginning of the horizon the firm announces a set of prices. In the contingent pricing scheme price evolution depends on demand realization. My focus is on the posted pricing scheme because of its ease of implementation. In equilibrium, buyers will employ a threshold policy in both pricing regimes, i.e. they will buy only if their private valuations are above a particular threshold. I show that a multi-unit auction with a reservation price provides an upper bound for the expected revenues for both pricing schemes. Numerical examples suggest that a posted pricing scheme with two or three price changes is enough to achieve revenues that are close to the upper bound. I find that neither posted pricing scheme nor contingent pricing scheme is dominant. The difference in expected revenues of these two schemes is small. I also investigate whether it is optimal for the seller to conceal inventory and sales information from buyers.; Chapter 3 studies an arrival control problem for a system with renewable assets. Customers belong to different classes and the arrival rate of each class depends on the price being charged for that class. Each customer uses the resource for a random duration. The objective is to maximize the long run average profit by dynamically changing prices, subject to a constraint on the quality of service, stated in terms of probability that demand is turned away because all units are being used. I show that this problem can be converted into a problem in which there is a penalty cost for blockage. The alternative formulation is more tractable and equivalent to the original model. I derive several structural properties of the optimal policy. I also provide a heuristic solution procedure to the original dynamic problem when the number of assets is large. Specifically,I formulate a diffusion model to approximate the original system. Numerical results show that this heuristic procedure performs very well. I also study the optimal policy whenthe only options available are either to admit customers from a particular class or deny admissions.; My conclusion and some interesting future extensions are incorporated in the last chapter. All proofs are found in the appendices. |
| Keyword | revenue management; dynamic pricing |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Type | texts |
| Legacy record ID | usctheses-m227 |
| Rights | Tong, Chunyang |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | http://www.usc.edu/isd/libraries/services/ask_a_librarian/email/ |
| Filename | etd-Tong-20070118 |
| Archival file | uscthesesreloadpub_Volume51/etd-Tong-20070118.pdf |
Description
| Title | Page 1 |
| Full text | ESSAYS ON REVENUE MANAGEMENT by Chunyang Tong A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Ful¯llment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (BUSINESS ADMINISTRATION) May 2007 Copyright 2007 Chunyang Tong |
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