A Dynamic Programming Approach for Integrating Dynamic Pricing and Capacity Decisions in a Rental Context

• Type: Article in International Conference Proceedings Book
• Date: 2018

Authors

Beatriz Brito Oliveira (Author) FEUP; Maria Antónia Carravilla (Author) FEUP; José Fernando Oliveira (Author) FEUP

Conference proceedings International

Title: OPERATIONAL RESEARCH

Pages: 297-311

18th Congress of the Portuguese-Association-of-Operational-Research (APDIO)

Valenca, PORTUGAL, JUN 28-30, 2017

Indexing

ISI Web of Knowledge - 1 Citation

Scopus - 1 Citation

Other information

Authenticus ID: P-00N-P7A

DOI: 10.1007/978-3-319-71583-4_20

Abstract (EN): Car rental companies have the ability and potential to integrate their dynamic pricing decisions with their capacity decisions. Pricing has a significant impact on demand, while capacity, which translates fleet size, acquisition planning and fleet deployment throughout the network, can be used to meet this price-sensitive demand. Dynamic programming has been often used to tackle dynamic pricing problems and also to deal with similar integrated problems, yet with some significant differences as far as the inventory depletion and replenishment are considered. The goal of this work is to understand what makes the car rental problem different and hinders the application of more common methods. To do so, a discrete dynamic programming framework is proposed, with two different approaches to calculate the optimal-value function: one based on a Mixed Integer Non Linear Program (MINLP) and one based on a Constraint Programming (CP) model. These two approaches are analyzed and relevant insights are derived regarding the (in)ability of discrete dynamic programming to effectively tackle this problem within a rental context when realistically sized instances are considered.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 15