Resource title

Revenue management in a dynamic network environment (RV of 2000/63/TM)

Resource image

image for OpenScout resource :: Revenue management in a dynamic network environment (RV of 2000/63/TM)

Resource description

The authors investigate dynamic policies for allocating scarce inventory to stochastic demand for multiple fare classes, in a network environment so as to maximize total expected revenues. Typical applications include airline networks or sequential reservations for a hotel or car rental service. They propose and analyze both theoretically and computationally a new algorithm, based on approximate dynamic programming, which provides structural insights into the optimal policy by using adaptive, non-additive bid-prices from a linear programming relaxation. They provide computational results that give insight into the performance of the new algorithm and the widely used bid price control, for several networks and demand scenarios. They extend the proposed algorithm to handle cancellations and no-shows by incorporating oversales decisions in the underlying linear programming formulation. They report encouraging computational results that show that the new algorithm leads to higher revenues and more robust performance.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2001/2001-65.pdf

Resource license

Copyright INSEAD. All rights reserved