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1764. Customer-Centric Dynamic Pricing for Free-Floating Vehicle Sharing Systems
Invited abstract in session WA-59: Pricing and applications 2, stream Pricing and Revenue Management.
Wednesday, 8:30-10:00Room: S08 (building: 101)
Authors (first author is the speaker)
| 1. | Matthias Soppert
|
| Chair of Business Analytics & Management Science, University of the Bundeswehr Munich | |
| 2. | Christian Müller
|
| Mercator School of Management, University of Duisburg-Essen | |
| 3. | Jochen Gönsch
|
| Mercator School of Management, University of Duisburg-Essen | |
| 4. | Claudius Steinhardt
|
| Chair of Business Analytics & Management Science, University of the Bundeswehr Munich (UniBw) |
Abstract
Free-floating vehicle sharing systems such as car sharing systems offer customers the flexibility to pick up and drop off vehicles at any location within the business area. However, this flexibility comes with the drawback that vehicles tend to accumulate at locations with low demand. To counter these imbalances, pricing has proven to be an effective and cost-efficient means. The fact that modern systems rely on mobile applications for their communication with customers, combined with the fact that providers know the exact location of each vehicle in real-time, offers new opportunities for pricing. We develop a profit-maximizing dynamic pricing approach which is customer-centric, meaning that, whenever a customer opens the mobile application, the price optimization incorporates the customer’s location as well as the customer’s choice behavior. In particular, it considers the effects of prices and walking distances to available vehicles on the customer’s rental decision. Further, the approach anticipates future vehicle locations, rentals, and profits. More specifically, we propose an approximate dynamic programming-based solution approach with nonparametric value function approximation. It allows direct application in practice, because historical data can readily be used and key parameters can be precomputed such that the online pricing problem becomes tractable.
Keywords
- Revenue Management and Pricing
- Transportation
Status: accepted
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