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Author Ziya, Serhan
Title Uniform and precision pricing for a service facility
Descript 110 p
Note Source: Dissertation Abstracts International, Volume: 64-06, Section: B, page: 2862
Directors: Hayriye Ayhan; Robert D. Foley
Thesis (Ph.D.)--Georgia Institute of Technology, 2003
We consider a service facility modeled as a queueing system with either finite or infinite waiting room capacity. Arriving customers are accepted if they are willing to pay the price charged by the service provider and there is space in the waiting room. This restriction on the number of waiting customers is not necessarily a result of a physical constraint. It can also be viewed as a control mechanism for the manager of the service facility to help achieve a certain service level
We analyze two different static pricing policies: uniform pricing and precision pricing. In the uniform pricing model, all customers are charged the same price. In the precision pricing model, the service provider has the ability to classify customers into different groups and charge different prices for each group. Each customer group is characterized by a "willingness-to-pay" distribution function, which gives the probability that a customer will purchase service as a function of the price
Under some assumptions, we derive expressions and develop methods to find optimal pricing policies that maximize the service provider's long run average profit. The methods require the solution of nonlinear resource allocation problems, which arise naturally in our formulation. We prove structural results on the optimal policies exploring their relationships with the customers' willingness-to-pay distribution and system parameters such as service and waiting room capacity. Under some conditions, we show that optimal prices decrease as service capacity increases; however, the relationship between the optimal prices and waiting room capacity depends on the value of other system parameters and customer demand. We also show that a hazard rate ordering between the willingness-to-pay distributions implies an ordering of the optimal prices in the same direction. Finally, we study the relationship among three assumptions which appear frequently in the pricing literature. Each of these assumptions ensure that the "revenue function" is strictly unimodal
School code: 0078
Host Item Dissertation Abstracts International 64-06B
Subject Engineering, Industrial
Alt Author Georgia Institute of Technology
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