Research On Dynamic Pricing Of Railway Freight Considering Consumer Behavior

With the development of computer information technology as well as operations research, revenue management has been widely used in industries, such as aviation/hotel and tourism, that providing a perishable product/service. As the main methods of revenue management, dynamic pricing is important to regulate the market supply and demand, furthermore, to increase the profitability of the business. In recent years, China’s transportation industry has shown a trend of fierce competition, the railway freight market share is declining year by year. In this situation, Mechanism reform become crucial for the railway transport enterprise, the key of that is to change the present single pricing strategy. Therefore, increasing revenue through reform of railway freight pricing mechanism take an important place.Firstly, this paper reviews the development history of revenue management and dynamic pricing. Then, the current situation of the railway freight pricing in China are analyzed. At the same time this chapter point out the existing problems in the pricing mechanism of railway freight transportation. The third chapter analyzes current railway freight market and its demand characteristic, established Markov dynamic pricing model, using the price-demand response function as well as maximum concave envelope optimization method. The fourth chapter studies the consumer choice behavior, and establishes an extended dynamic pricing model of batch purchase, finally the model is extended to condition of multiple stations. The last chapter solve the model, using the mathematical simulation method. Using the results of the solution, article analyze how the change of parameters,such as demand or order quantity limit, impacts on total and marginal revenue, the characteristics of the revenue function are also discussed.