Ferda Tanguner, Lerzan Ormeci and Zeynep Aksin. Dynamic Cross-Selling and Pricing with Promotional Products i

Abstract. In this study, we consider a firm which offers two different products and a service which is related to these products to its customers. One of the product is called “regular product” which is assumed to have unlimited inventory, the other one is the “promotional product” which has a limited inventory which should be sold in a limited time. The firm also sells a “service” which has no inventory constraint. In our study, each regular product customer is offered a promotional product, a service or both in a bundle, at a dynamically adjusted price. Our aim is to decide which item to offer and at which price in order to maximize the total expected revenue over a finite horizon. This research will mostly focus on the stochastic and dynamic aspects of the problem using tools from Markov Decision Processes.