Ordering and pricing of service products in an advance sales system with price-dependent demand |
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| Institution: | 1. School of Information Science and Technology, Jiujiang University, Jiujiang, Jiangxi, China;2. Oujiang College, Wenzhou University, Wenzhou, Zhejiang, China;3. School of Computer Science and Technology, Huazhong University of Science and Technology, Wuhan, Hubei, China;1. Economic and Management School, Wuhan University, China;2. School of Business and Management, The Hong Kong University of Science and Technology, Hong Kong;3. School of Engineering, The Hong Kong University of Science and Technology, Hong Kong;1. IMUVA, Departamento de Matemática Aplicada, Universidad de Valladolid, Valladolid, Spain;2. Departamento de Matemáticas, Estadística e Investigación Operativa, Universidad de La Laguna, Tenerife, Spain;3. Departamento de Dirección de Empresas e Historia Económica, Universidad de La Laguna, Tenerife, Spain |
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| Abstract: | This investigation addresses a service inventory control problem in which a firm orders and sells a service which will be used or consumed by customers on a specific future date. The firm sells the product through an advance booking system, aiming to optimize product price to maximize the total expected profit. Considering situations in which product demand is price-dependent and customers with reservations may cancel advance orders, this work develops a continuous-time model to simultaneously determine the order quantity and selling prices. The analytical results reveal that the optimal ordering quantity and prices are derived via closed-form solutions. In addition, sensitivity analysis of the optimal prices with respect to the system parameters is also conducted to illustrate optimal decision characteristics. |
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