Incorporating Pricing Decisions into the Stochastic Dynamic Fleet Management Problem

Topaloglu, Huseyin; Powell, Warren
August 2007
Transportation Science;Aug2007, Vol. 41 Issue 3, p281
Academic Journal
This paper shows how to coordinate the decisions on pricing and fleet management of a freight carrier. We consider a setting where the carrier announces its prices at the beginning of a certain time horizon and the load arrivals over this horizon depend on the announced prices. Assuming that the vehicle fleet is managed according to a particular class of fleet management models, we present a tractable method to obtain sample path-based directional derivatives of the objective function with respect to the prices. We use this information to search for a good set of prices. Numerical experiments show that our approach yields high-quality solutions.


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