An optimal policy for joint dynamic price and lead-time quotation
Dynamic pricing, Lead-time quotation, Threshold policy
For a dynamic joint price and lead-time quotation problem with a fairly general demand function, we show that the policy consisting of a threshold and a reward-maximizing lead-time is optimal. This policy offers some interesting managerial insights. Under this policy, finding the exact optimal quotation can be accomplished by single-variable policy iterations of unimodal value functions.
Copyright © 2011, INFORMS
Access to external full text or publisher's version may require subscription.
Feng, J., Liu, L., & Liu, X. (2011). An optimal policy for joint dynamic price and lead-time quotation. Operations research, 59(6), 1523-1527. doi: 10.1287/opre.1110.0969