Demand Management Based on Model Predictive Control Techniques

Abstract

Demand management (DM) is the process that helps companies to sell the right product to the right customer, at the right time, and for the right price. Therefore the challenge for any company is to determine how much to sell, at what price, and to which market segment while maximizing its profits. DM also helps managers efficiently allocate undifferentiated units of capacity to the available demand with the goal of maximizing revenue. This paper introduces control system approach to demand management with dynamic pricing (DP) using the model predictive control (MPC) technique. In addition, we present a proper dynamical system analogy based on active suspension and a stability analysis is provided via the Lyapunov direct method.