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An effective dynamic decision policy for the revenue management of an airline flight
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An effective dynamic decision policy for the revenue management of an airline flight

Yi-Feng HungChien-Hao Chen
International Journal of Production Economics, 卷.144(2), 頁碼.440-450
08/2013

摘要

Decision support Rationing decision Revenue management Business Management and Accounting (all) Economics and Econometrics Management Science and Operations Research Industrial and Manufacturing Engineering
Airline companies normally classify the seats of a cabin class into a number of fare classes. Customers of different fare classes arrive randomly during the booking horizon. Every time a customer in a certain fare class arrives, the airline company must decide promptly whether to fulfill or reject the request. To increase revenues, the airline company may reject certain lower-fare class customer requests and reserve the seats for future higher-fare class customers. However, rejecting too many lower-fare class customers may result in empty seats when the flight takes off. Given the multiple fare classes of a flight and the non-homogeneous Poisson customer arrival process in each fare class, and with the aim of maximizing the revenue of the flight, this study develops and tests two heuristic approaches - the dynamic seat rationing (DSR) decision policy and the expected revenue gap (ERG) decision policy - to help the airline make a fulfillment-or-rejection decision when a customer arrives. The simulation experiments show that ERG performs best among all tested approaches and, on average, the revenue from the ERG being merely 0.8% less than that of the optimal decision made with perfect information. Moreover, the ERG is very robust under various problem conditions. © 2013 Elsevier B.V.

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