STOCHASTICS SEMINAR SERIES -- Uniform and Precision Pricing for a Single Server Service Facility

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Joint work with: Hayriye Ayhan and Robert D. Foley.

We consider a service facility which can be modeled as a G/GI/1/m system. Arriving customers are accepted if they are willing to pay the price charged by the service provider and there is room in the waiting area. We consider two different models for two different classes of pricing policies: uniform pricing and precision pricing. In the
precision pricing model, it is assumed that service provider has the ability to classify customers into different customer groups which are characterized by their willingness-to-pay distribution functions and charge them accordingly. In the uniform pricing model, all customers are charged the same price. Under some assumptions, we derive optimal price expressions that maximize service provider's long run average rate of profit. We also provide some structural results on the relationships between the optimal prices, customers' willingness-to-pay and system parameters (e.g. waiting space capacity, service rate).


  • Workflow Status: Published
  • Created By: Barbara Christopher
  • Created: 10/08/2010
  • Modified By: Fletcher Moore
  • Modified: 10/07/2016


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