Customer choice behavior, such as buy-up and buy-down, is an important phenomenon in a wide range of revenue management contexts. Yet most methodologies ignore this phenomenon—or at best approximate it heuristic way. In paper, we provide exact quite general analysis problem. Specifically, analyze single-leg reserve problem which the buyers' behavior modeled explicitly. The model very general, simply specifying probability purchase for each fare product function set products offered. control...

Bid-prices are becoming an increasingly popular method for controlling the sale of inventory in revenue management applications. In this form control, threshold—or “bid”—prices set resources or units (seats on flight legs, hotel rooms specific dates, etc.) and a product (a seat fare class itinerary room sequence dates) is sold only if offered exceeds sum threshold prices all needed to supply product. This approach appealing intuitive practical grounds, but theory underlying it not well...

Federal aviation regulations require that all aircraft undergo maintenance after flying a certain number of hours. To ensure high utilization, is done at night, and these translate into requiring to overnight station every three four days (depending on the fleet type), visit balance-check periodically. After schedule fleeted, are routed satisfy requirements. We give fast simple polynomial-time algorithms for finding routing in graph whose routings during day fixed, satisfies both three-day...

We analyze a randomized version of the deterministic linear programming (DLP) method for computing network bid prices. The consists simulating sequence realizations itinerary demand and solving programs to allocate capacity itineraries each realization. dual prices from this are then averaged form price approximation. This (RLP) is only slightly more complicated implement than DLP method. show that RLP can be viewed as procedure estimating gradient expected perfect information (PI) revenue....

In this paper, we study price competition for an oligopoly in a dynamic setting, where each of the sellers has fixed number units available sale over periods. Demand is stochastic, and depending on how it evolves, may change their prices at any time. This reflects fact that firms constantly, almost costlessly, prices, reacting to updates estimates market demand, competitor or inventory levels. setting with demand uncertainty, show there unique subgame-perfect equilibrium duopoly, which all...

Federal aviation regulations require that all aircraft undergo maintenance after flying a certain number of hours. Most major U.S. airlines observe the by requiring spend night at station most three or four days flying. In addition, some every goes through special for what is commonly called balance check. Airlines usually schedule routine only so as not to cut into utilization. The routing problem find satisfies short-term requirements. Gopalan, R. and Talluri, K. T. (“The Aircraft...

An airline's schedule consists of a set flight legs that it is scheduled to fly. A fleet assignment an equipment types (such as 757, 767, F100 etc.) each the legs. The called daily if same used every day week. has satisfy certain coverage, balance, and availability constraints. Given assignment, we consider problem changing specified leg different type while still satisfying all We give simple algorithm for making this swap will not affect composition aircraft overnighting at various...

Customer choice behavior, such as "buy-up" and "buy-down", is an important phenomenon in a wide range of revenue management contexts.Yet most methodologies ignore this -or at best approximate it heuristic way.In paper, we provide exact quite general analysis problem.Specifically, analyze single-leg yield problem which the buyers' behavior modeled explicitly.The model perfectly simply specifies probability purchasing each fare product function set products offered.The control to decide subset...

The network choice revenue management problem models customers as choosing from an offer set, and the firm decides best subset to at any given moment maximize expected revenue. resulting dynamic program for is intractable approximated by a deterministic linear called CDLP which has exponential number of columns. However, under choice‐set paradigm when segment consideration sets overlap, difficult solve. Column generation been proposed but finding entering column shown be NP‐hard. In this...

The study On Dynamic Pricing with Covariates introduces novel methods for setting prices when key market factors, or covariates, vary over time. Although most existing literature assumes these factors follow a fixed distribution, the authors show such assumptions are unnecessary achieving near-optimal pricing strategies. They provide new algorithms upper regret bounds that match lower (up to logarithmic factor)—even covariates exhibit no statistical pattern. In particular, analysis...

ABSTRACT An abiding preoccupation for firms is understanding how customers value their products versus competitors' products. This difficult to quantify and estimate from data as, even if competitor prices are public information, sales typically unobservable. However, in some industries, most prominently the hotel industry, third‐party information brokers collect supply aggregate information. In these reports Smith Travel Research, popularly known as STR reports, widely subscribed to. Hotels...

The network revenue management (RM) problem arises in airline, hotel, media, and other industries where the sale products use multiple resources. It can be formulated as a stochastic dynamic program, but program is computationally intractable because of an exponentially large state space, number heuristics have been proposed to approximate its value function. In this paper we show that piecewise-linear approximation RM tractable; specifically separation solved relatively compact linear...

Reviews for products and services written by previous consumers have become an influential input to the purchase decision of customers. Many service businesses monitor reviews closely feedback as well detecting flaws, they part performance review managers with rewards tied improvement in aggregate rating. empirical papers documented a bias ratings, arising because customers’ inherent self-selection their choices bounded rationality evaluating reviews. Although there is vast literature...

Revenue management practices often include overbooking capacity to account for customers who make reservations but do not show up. In this paper, we consider the network revenue problem with no-shows and overbooking, where show-up probabilities are specific each product. No-show rates differ significantly by product (for instance, itinerary fare combination an airline) as sale restrictions demand characteristics vary However, models that no-show individual difficult handle because...

Models incorporating more realistic models of customer behavior, as customers choosing from an offer set, have recently become popular in assortment optimization and revenue management. The dynamic program for these is intractable approximated by a deterministic linear called the choice (CDLP), which has exponential number columns. Column generation been proposed but finding entering column NP-hard when segment consideration sets overlap. In this paper we propose new approach segment-based...

We propose a new model for the airline revenue management problem that incorporates passenger routing along with seat inventory control. The models proposed so far in literature have concentrated solely on controlling lower fare sales high demand flights to maximise revenue. Our will, addition, exploit presence of low alternative routes increase further. For large airlines multiple hubs and routes, our solution procedures potential significant enhancements, almost no deterioration level...

Revenue management is the collection of strategies and tactics firms use to scientifically manage demand for their products services. The practice has grown from its origins in airlines status today as a mainstream business wide range industry areas, including hospitality, energy, fashion retail, manufacturing. This article provides an introduction this increasingly important subfield operations research, with emphasis on simulation. Some contents are based excerpts book Theory Practice...

Many dynamic revenue management models divide the sale period into a finite number of periods T and assume, invoking fine-enough grid time, that each sees at most one booking request. These Poisson-type assumptions restrict variability demand in model, but researchers practitioners were willing to overlook this for benefit tractability models.

In recent years, several approximation methods have been proposed for the choice network revenue management problem. These are because dynamic programming formulation of problem is intractable even moderately sized instances. this paper, we consider three that obtain upper bounds on value function, namely, deterministic linear program (CDLP), affine (AF), and piecewise-linear (PL). It known bound tighter than bound, which in turn CDLP. prove how much approximations can tighten We show (i)...

Problem definition: This paper studies the joint estimation of consumer arrival rate and choice model parameters when “no-purchasers” (customers who considered product but did not purchase) are observable. Estimating this unconstrained demand even with simplest discrete-choice such as multinomial logit (MNL) becomes challenging we do know fraction that have chosen outside option (i.e., purchased). Methods been proposed to use market share pin down parameter associated option. However, data...