Using Discrete Event Simulation to Analyze Pricing Strategies for Same-Location Car Rentals

The car rental business is a multi-billion-dollar industry with ever-increasing competitiveness. Car rental companies must adapt dynamic pricing strategies to maximize revenues and operational efficiency. The aim of this study is to understand what pricing strategies work best for rental companies so as to achieve higher revenue for same-location pick-up and drop-off of rentals. With this goal in mind, we have modified a simulation model from a previous study to incorporate the logic for the current analysis. The analysis has been conducted with realistic customer demand inputs and a design of experiments consisting of 195 scenarios. The results show that with our improved pricing strategy, it is possible to increase revenues by more than 20 percent.