The Optimal Threshold Price for the Name-Your-Own-Price Retailer with Stochastic Demand

Name-Your-Own-Price (NYOP), a new sales mode, has emerged in recent years and is different from traditional pricing mode. Most previous papers study the NYOP channel from the auction perspective or predicting the retailers´ inventory is unlimited. However, the NYOP channel differs substantially from the environment studied in the auction. The typical NYOP retailer such as priceline.com sells airline tickets, hotels et al that faces a supply constraint. The online retailers´ stochastic revenue model are put forward and numerically analyzed when customers´ stochastic demand and the probability distribution of pricing are known. The relationship between the optimal threshold price and limited inventory and the selling time are discussed.