Pricing with Informative Delay Announcements

Date

2017-09-05

Author

Karakaya, Sırma
Savaşaneril Tüfekci, Seçil
Serin, Yaşar Yasemin

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We study the pricing problem of a service provider who makes delay announcements to inform the customers about anticipated delays. Besides making price quotes to arriving customers, the provider decides on the amount of delay information to be revealed to the customers. Price and announcement decisions affect the behavior of the customers who are delay- and price-sensitive, which in turn affects the profitability of the firm. 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, and 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 and precision of the price quotes have a significant impact on selecting the delay information scheme.

URI

http://www.or2017.de/scientific-program/schedule/20171002_program_guide_book_of_abstracts.pdf
https://hdl.handle.net/11511/76289

Conference Name

International Conference on Operations Research, (6 - 08 September 2017)

Collections

Department of Industrial Engineering, Conference / Seminar

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Citation Formats

S. Karakaya, S. Savaşaneril Tüfekci, and Y. Y. Serin, “Pricing with Informative Delay Announcements,” presented at the International Conference on Operations Research, (6 - 08 September 2017), Berlin, Almanya, 2017, Accessed: 00, 2021. [Online]. Available: http://www.or2017.de/scientific-program/schedule/20171002_program_guide_book_of_abstracts.pdf.