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Research output: Working paper
Research output: Working paper
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TY - UNPB
T1 - Dynamic Simultaneous Fare Proration for Large-Scale Network Revenue Management
AU - Kemmer, P
AU - Strauss, A K
AU - Winter, T
PY - 2011
Y1 - 2011
N2 - Network revenue management is concerned with managing demand for products that require inventory from one or several resources by controlling product availability and/or prices in order to maximize expected revenues subject to the available resource capacities. One can tackle this problem by decomposing it into resource-level subproblems that can be solved efficiently, e.g. by dynamic programming (DP). We propose a new dynamic fare proration method specifically having large-scale applications in mind. It decomposes the network problem by fare proration and solves the resource-level dynamic programs simultaneously using simple, endogenously obtained dynamic marginal capacity value es- timates to update fare prorations over time. An extensive numerical simulation study demonstrates that the method results in tightened upper bounds on the optimal expected revenue, and that the obtained policies are very effective with regard to achieved revenues and required runtime.
AB - Network revenue management is concerned with managing demand for products that require inventory from one or several resources by controlling product availability and/or prices in order to maximize expected revenues subject to the available resource capacities. One can tackle this problem by decomposing it into resource-level subproblems that can be solved efficiently, e.g. by dynamic programming (DP). We propose a new dynamic fare proration method specifically having large-scale applications in mind. It decomposes the network problem by fare proration and solves the resource-level dynamic programs simultaneously using simple, endogenously obtained dynamic marginal capacity value es- timates to update fare prorations over time. An extensive numerical simulation study demonstrates that the method results in tightened upper bounds on the optimal expected revenue, and that the obtained policies are very effective with regard to achieved revenues and required runtime.
KW - Transport
KW - Revenue Management
KW - Dynamic Programming
KW - Air Transport
M3 - Working paper
T3 - Management Science Working Paper Series
BT - Dynamic Simultaneous Fare Proration for Large-Scale Network Revenue Management
PB - The Department of Management Science
CY - Lancaster University
ER -