Dynamic Pricing with Volume Discounts in Online Settings

Quantity Premiums and Discounts in Dynamic Pricing

Abstract: We consider a dynamic pricing problem for a monopolistic company selling a perishable product when customer demand is uncertain and occurs in batches which must be fulfilled as a whole. The seller can price-discriminate between the batches of different size by setting different unit prices. The problem is modeled as a stochastic optimal control problem to find an inventory-contingent ...

Online Pricing with Discounts by a Location Model

This paper investigates a model for pricing the demand for a set of goods when multiple suppliers operate discount schedules based on total business value. We formulate the buyers’s decision problem as a mixed binary integer program (MIP) which is a generalization of the capacitated facility location problem (CFLP) and can be solved using Lagrangean heuristics. We have investigated commercially...

Dynamic Pricing Through Discounts for Optimizing Multiple-Class Demand Fulfillment

Dynamic Online Pricing with Incomplete Information

Consider the pricing decision for a manager at large online retailer, such as Amazon.com, that sells millions of products. The pricing manager must decide on real-time prices for each of these product. Due to the large number of products, the manager must set retail prices without complete demand information. A manager can run price experiments to learn about demand and maximize long run profit...

Dynamic cash discounts when sales volume is stochastic

In this paper, a dynamic terms of sale model is developed which suggests deep cash discounts can be partially explained by the positive relationship between the shadow value of sales and the optimal cash discount. The effect of sales volume uncertainty on the magnitude of cash discounts is also explored. Numerical results suggest the relationship between uncertainty and cash discounts is nonlin...