Pricing with informative delay announcements

Date

2017

Author

Karakaya, Sırma

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In many industries price and delay (lead-time) information affect customer behavior. According to the provided delay information and/or price, customers choose either to stay or balk. In this thesis, we study the effects of these two decision variables on the profitability. For the pricing problem, we study two schemes: static pricing and dynamic pricing. For the delay announcement problem, we consider three schemes: no information sharing, partial information sharing, and full information sharing. We model the system as a stochastic discrete-time Markovian queue, and model the pricing problems through Markov decision process. We compare several delay information and pricing schemes and through analytical results and numerical study identify the conditions that make specific delay information or pricing schemes more preferable. We also analyze the impact of the information asymmetry on the preference of the provider. We consider pricing schemes with varying levels of flexibility. Our findings show that even if the information asymmetry favors the service provider, the delay information scheme might severely curb the benefit of the pricing flexibility. Furthermore, results show that traffic intensity, customer-sensitivity level and price quotes have a significant impact on selecting the delay information scheme.

Subject Keywords

Pricing., Markov processes., Stochastic processes., Information asymmetry.

URI

http://etd.lib.metu.edu.tr/upload/12621095/index.pdf
https://hdl.handle.net/11511/26583

Collections

Graduate School of Natural and Applied Sciences, Thesis

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Citation Formats

S. Karakaya, “Pricing with informative delay announcements,” M.S. - Master of Science, Middle East Technical University, 2017.