Abstract
In many industries, sellers have the opportunity to enhance their revenues through the dynamic pricing of their perishable products such as flight seats, hotel rooms, and seasonal fashion goods that become worthless if they are not sold by a specific time. Therefore, how to dynamically adjust the prices of perishable products through differentiating the purchased time and the amount of unsold items to maximize the revenue is an important issue. Due to the immediate response and lower menu cost on the Internet, the application of the dynamic pricing to the Internet market is especially valuable.In this thesis, we construct a dynamic pricing model for selling a given stock of identical perishable products over a finite time horizon on the Internet. By the model, we can compute all optimal switching time. Then according to the calculated time thresholds, we can dynamically adjust prices on the Internet to maximize the total profit. In addition, we propose some lemmas to demonstrate the properties of the expected revenue and the time thresholds in the model. Furthermore, we illustrate a numerical example to show the procedure and the results. Finally, we examine several extensions where overbooking, re-supply, and cancellations are allowed.