An Inventory Problem using Threshold Policies for Rationing and Pricing Decisions

this paper presents an efficient heuristic algorithm for a revenue management problem with a determined optimal structure. Consider a manufacturing system with two customer classes and two options for the selling price. It is shown by the authors in a recent paper that this problem has an optimal structure. The optimal structure has two thresholds, the higher one is a level in which the pricing decision changes and the lower threshold is a point for changing the rationing decision. In this paper, we propose an efficient heuristic algorithm by the use of queuing theory for finding the value of these thresholds.

Keywords:

revenue management , pricing , rationing , queuing theory , heuristic algorithms