We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
Bayesian Dynamic Pricing in Queueing Systems with Unknown Delay Cost Characteristics.
- Authors
Afèche, Philipp; Ata, Barış
- Abstract
The revenue management literature for queues typically assumes that providers know the distribution of customer demand attributes. We study an observable M=M=1 queue that serves an unknown proportion of patient and impatient customers. The provider has a Bernoulli prior on this proportion, corresponding to an optimistic or pessimistic scenario. For every queue length, she chooses a low or a high price, or turns customers away. Only the high price is informative. The optimal Bayesian price for a queue state is belief-dependent if the optimal policies for the underlying scenarios disagree at that queue state; in this case the policy has a belief-threshold structure. The optimal Bayesian pricing policy as a function of queue length has a zone (or, nested-threshold) structure. Moreover, the price convergence under the optimal Bayesian policy is sensitive to the system size, i.e., the maximum queue length. We identify two cases: prices converge (1) almost surely to the optimal prices in either scenario or (2) with positive probability to suboptimal prices. Only Case 2 is consistent with the typical incomplete learning outcome observed in the literature.
- Subjects
BAYESIAN analysis; NONPROFIT sector; TIME delay systems; REVENUE management; DISTRIBUTION (Economic theory); ECONOMIC demand; PROBABILITY theory
- Publication
M&SOM: Manufacturing & Service Operations Management, 2013, Vol 15, Issue 2, p292
- ISSN
1523-4614
- Publication type
Article
- DOI
10.1287/msom.1120.0418